among other reasons‚ “sale of stock at a price below book value per share can only depress the stock price and decrease shareholders’ wealth.” To prove the point they construct the following example: “Suppose 2‚000 new shares are issued at $40 and the proceeds are invested. (Neglect issue costs.) Suppose return on investment doesn’t change. Then Book net worth = $580‚000 Total earnings = .08(580‚000) = $46‚400 Earnings per share = 46‚400/12‚000 = $3.87 Thus‚ EPS declines‚ book value per share
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1. Suppose that changes in bank regulations expand the availability of credit cards so that people need to hold less cash. If the central bank does not respond to this event‚ what will happen to the price level? Use a diagram to assist in answering this question. [5 marks] 2. Use the loanable funds model to explain what happens to interest rates and investment if a government moves from a balanced budget position to a budget surplus. [10 marks] 3. Suppose that the T-account for The Open Campus
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being described by a utility function that summarizes preferences over 13 14 CHAPTER u 1 Basic Concepts diVerent outcomes. For a wealth level W‚ let U(W ) represent the individual’s utility of that wealth. It is reasonable to suppose that this individual always prefers more wealth to less. This is called ‘‘nonsatiation’’ and can be expressed as U0 (W) > 0‚ where the prime denotes a mathematical derivative. That is‚ at the margin‚ an
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Fig. 1.01 shows two systems A and B separated by an adiabatic wall (a wall which does not allow hear flow).The two systems are placed in contact with a third system C with a diathermic wall (a wall which permits heat flow) in between. Suppose that the system A‚ B and C are at different temperatures. Obviously‚ the three systems will not be in thermal equilibrium with one another. However‚ the systems A and C; and the systems B and C will exchange heat and after certain time‚ they will
Free Thermodynamics
CAPACITY PLANNING Real Options Analysis Practice Questions and Solutions CAPACITY PLANNING Question 1: PROJECT SABLE Use a 30% per year discount rate to evaluate Project Sable‚ which has two phases. You may invest in the first‚ in both or in neither. You may not invest in the second phase without investing in the first. Phase 1 requires an investment of $100. One year later the project delivers on the average $120. At that time‚ after the phase 1 payout has been received‚ you may invest
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chemicals A) GDP is adjusted downward to account for this B) GDP is adjusted upward to account for this. C) GDP tends to understate economic welfare. D) GDP tends to overstate economic welfare. E) None of the above. 2. __________ Suppose hamburgers cost $1.20 last year and $1.32 this year‚ and the overall price index (the GDP deflator) rose from 110 last year to 120 this year. How much will 1000 hamburgers contribute to this year’s real GDP? A) $1000. B) $1100. C) $1200
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’ $ 1 MBA Corporate Finance Class Of 2014 V. Stock and Company Valuation Ian Garrett & % ’ $ 2 Some Terminology • Dividend – periodic cash distribution of (part of) profits from the company to its shareholdersa • Earnings Per Share (EP S) – profit divided by the number of shares outstanding • Payout Ratio – the fraction of earnings paid out • P/E Ratio – current share price divided by annual earnings per share: the multiple of earnings at which the stock currently sells
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What happens? For many reactions involving liquids or gases‚ increasing the concentration of the reactants increases the rate of reaction. In a few cases‚ increasing the concentration of one of the reactants may have little noticeable effect of the rate. These cases are discussed and explained further down this page. Don’t assume that if you double the concentration of one of the reactants that you will double the rate of the reaction. It may happen like that‚ but the relationship may well
Free Chemical reaction Chemical kinetics Reaction rate
Problem 1: Suppose that the supply schedule of Belgium Cocoa beans is as follows: |Price of cocoa beans (per pound) |Quantity of cocoa beans supplied (pounds) | |$40 |700 | |$35 |600 | |$30 |500
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risk-averse investor would choose the economy in which stock returns are independent because this risk can be diversified away in a large portfolio. 10-30. What does the beta of a stock measure? Beta measures the amount of systemic risk in a stock 10-35. Suppose the market risk premium is 5% and the risk-free interest rate is 4%. Using the data in Table 10.6‚ calculate the expected return of investing in a. Starbucks’ stock. b. Hershey’s stock. c.
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