penny stocks is a very good opportunity of investment. If you do not have a basic understanding of how to trade penny stock it will be a great risk in investing and you may make boundless mistakes out of ignorance and absence of direction. It is more favorable to invest in companies which are waiting for their future rather than companies which have already matured are now in decline. While investing in penny stocks‚ there is no doubt that there is a huge insubstantially in the investment. Without
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overall value of the firm‚ it should use debt to finance the $100 million purchase. Since interest payments are tax deductible‚ debt in the firm’s capital structure will decrease the firm’s taxable income‚ creating a tax shield that will increase the overall value of the firm. 2. Since Stephenson is an all-equity firm with 15 million shares of common stock outstanding‚ worth $32.50 per share‚ the market value of the firm is: Market value of equity = $32.50(15‚000‚000) Market value of equity
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20-14 International Capital Market (3IM) Lecture 9 Option versus Stock Investments • Could a call option strategy be preferable to a direct stock purchase? • Suppose you think a stock‚ currently selling for $100‚ will appreciate. • A 6-month call costs $10 (contract size is 100 shares). • You have $10‚000 to invest. • Strategy A: Invest entirely in stock. Buy 100 shares‚ each selling for $100. • Strategy B: Invest entirely in at-the-money call options. Buy 1‚000 calls‚ each selling for $10
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yield on junk bonds is lower than the yield on AAA-rated bonds because of the higher default risk associated with junk bonds. Answer True False 1 points Question 4 In general‚ interest on bonds‚ like dividends on preferred stock‚ may be deferred until a later date at the discretion of management‚ making debt financing more appealing to corporate managers. Answer True False 1 points Question 5 Restrictive provisions in bond indenture agreements are designed
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charges. As a result‚ firms in unstable industries tend to use less debt than those whose sales are subject to only moderate fluctuations. 12-4 The tax benefits from debt increase linearly‚ which causes a continuous increase in the firm’s value and stock price. However‚ bankruptcy-related costs begin to be felt after some amount of debt has been employed‚ and these costs offset the benefits of debt. See Figure 12-5 in the textbook. 12-5 Carson does have leverage because its EPS increases by
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29) All of the following features may be characteristic of preferred stock EXCEPT A) callable. B) no maturity date. C) tax-deductible dividends. D) convertible. Answer: c If a firm has class A and class B common stock outstanding‚ it means that A) each class receives a different dividend. B) the par value of each class is different. C) the dividend paid to one of the classes is tax deductible by the corporation
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group for the investment challange was to maximize expected returns by investing in risky assets. We pursued an active trading strategy and as general rule bought stocks when the prices were relatively low in comparison to historical prices and sold them when the prices were high. At the end of the challenge 58.94% of our potrolifio was invested in stocks‚ 9.74% in bonds‚ 7.63% in equities and 23.67% in currencies. We started the Challenge with a global value of 1‚000‚000 USD and this value ranged between
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Aspin Corporation’s charter authorizes issuance of 2‚000‚000 shares of common stock. Currently‚ 1‚400‚000 shares are outstanding‚ and 100‚000 shares are being held as treasury stock. The firm wishes to raise $48‚000‚000 for a plant expansion. Discussions with its investment bankers indicate that the sale of new common stock will net the firm $60 per share. a. What is the maximum number of new shares of common stock that the firm can sell without receiving further authorization from shareholders
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CFGB6102 Corporate Finance Stock Valuation 1. A firm’s common stock currently sells for $75 per share. The firm has total assets of $1‚000‚000 and total liabilities‚ including preferred stock‚ of $350‚000. If the firm has 10‚000 shares of common stock outstanding‚ (a) what is the book value of each share of common stock? (b) is the stock overvalued or undervalued in the marketplace? (c) what might be the reason(s) for your answer in (b). (a) (b) overvalued (c) market value of the assets is greater
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International Investment Management Mid-term Assignment Submitted by: Anindyta Ayu Indhriawati 25/03/2014 Submitted to: Dr Charalampos Stasinakis The purpose of this paper is to examine the relevance from the modern portfolio theory to the global investment market. Some of the questions that related to the use of techniques about the portfolio theory and it’s relation to risk and return will be discussed in terms of solving the complexity of the portfolio problems
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