yield on the bond? 7. A bond carries an 8 percent coupon‚ paid semiannually. The par value is €1‚000‚ and the bond matures in six years. If the bond currently sells for €911.37‚ what is its yield to maturity? What is the effective annual yield? 8. Company X is expected to pay dividends of $5.50 a share in 1 year’s time and $5.80 a share in 2 years’ time‚ after which its stock is expected to sell at $91.
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Solutions to questions 1. Finance involves three main areas—corporate finance‚ financial institutions and markets‚ and investments—that are closely related and complementary. For example‚ in corporate finance the central issues are how to acquire and employ or invest funds. To acquire funds a financial manager must deal with financial institutions‚ so some knowledge of the operations of financial institutions and markets is essential. Similarly‚ corporate finance involves investments because decisions
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CGA-CANADA ADVANCED CORPORATE FINANCE [FN2] EXAMINATION June 2011 Marks Notes: 1. Questions 1 and 2 are multiple choice. For these questions‚ select the best answer for each of the unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example‚ if the best answer for item (a) is (1)‚ write (a)(1) in your examination booklet. If more than one answer is given for an item‚ that item will not be marked. Incorrect answers will be marked as zero
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24. We can use the debt-equity ratio to calculate the weights of equity and debt. The debt of the company has a weight for long-term debt and a weight for accounts payable. We can use the weight given for accounts payable to calculate the weight of accounts payable and the weight of long-term debt. The weight of each will be: Accounts payable weight = .15/1.15 = .13 Long-term debt weight = 1/1.15 = .87 Since the accounts payable has the same cost as the overall WACC‚ we can write the equation for
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Chapter 1 Corporate Finance- the acquisition and efficient use of funds required by the fund The acquisition refers to the finance decision Efficient use of funds refers to the investment decision A major aspect of corporate finance is the creation and determination of value Objective of Financial Management- Maximize shareholder wealth is the main goal—to maximize the market value of the firm 3 Main Decision Areas of Financial Manager to Achieve Maximization: 1. Investment Decision- What
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US shale gas exploration and whether their impact is long- or short-lived. The LNG tanker market is a market highly specialized and sophisticated with some of the most complex and expensive vessels on its hands. As is the case with most transport modes‚ also LNG shipping is derived from the demand and supply of its underlying commodity: natural gas. Natural gas is one of the major energy sources and looking at increasing crude oil prices and emission control regulations in both the US and Europe
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| Corporate Finance2 CreditsBU.231.620.62Thursday 6pm – 9pm‚ 10/18/2012--12/13/2012Fall2‚ 2012Columbia‚ Columbia Center‚ 218 | Instructor Shabnam Mousavi Contact Information Phone Number: (410)234-9450 E-mail Address: shabnam@jhu.edu Office Hours Monday/Thursday 10am-noon Required Text and Learning Materials (1) Berk‚ J. and P. DeMarzo. 2007. Corporate Finance. 2nd Edition. Pearson‚ Addison-Wesley with MyLab access. The ISBN is 0-13-295-040-5. (2) Lecture Notes. The lecture
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security‚ to gain more information about expected returns and the effects of certain financial institutions on securities. An investor can get two type f returns on his security. First one is called the dividend. It is the amount of money that a company gives to its shareholders‚ from its profits. Dividend can be received even before the security reaches at maturity level. It can be received during holding period of that security but it is taxable also. Second one is called capital gain or capital
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So‚ equity weight = 100/120=83.3%‚ debt weight=20/120=16.7% After-tax WACC= equity weight * cost of equity + debt weight * effective cost of debt =83.3%*8%+16.7%*5%*(1-40%) = 7.2% 4. Suppose you are the founder of a private company ABC. Initially you raised $500‚000 from an angel investor from the first-round financing. As a result‚ both you and the angel investor hold 100‚000 shares. Now in the second-found financing‚ you plan to raise another $1‚000‚000 from a venture capitalist
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List and briefly describe the three basic questions addressed by a financial manager. What should be the goal of the financial manager of a corporation? Why? What advantages does the corporate form of organization have over sole proprietorships or partnerships? If the corporate form of business organization has so many advantages over the sole proprietorship‚ why is it so common for small businesses to initially be formed as sole proprietorships? The three areas are: 1. Capital budgeting: The
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