Fin_3000 problem 4

ABC has 1 million shares outstanding, each of which has a price of $24. It has made a takeover offer of XYZ Corporation which has 1 million shares outstanding, and a price per share of $2.39. Assume that the takeover will occur with certainty and all market participants know this. Furthermore, there are no synergies to merging the two firms. a. Assume ABC made a cash offer to purchase XYZ for $5.04 million. What happens to the price of ABC and XYZ on the announcement? What premium over the current market price does this offer represent? b. Assume ABC makes a stock offer with an exchange ratio of 0.21. What happens to the price of ABC and XYZ this time? What premium over the current market price does this offer represent? c. At current market prices, both offers are offers to purchase XYZ for $5.04 million. Does that mean that your answers to parts (a) and (b) must be identical? Explain. a. Assume ABC made a cash offer to purchase XYZ for $5.04 million. What happens to the price of ABC…

Denali Inc. is acquiring Whitney Corp. at an exchange ratio of 2:1. After the deal is announced, Denali’s stock price is $25 and Whitney’s stock price is $47. Create a trade that would take advantage of the merger arbitrage opportunity, starting with 100 shares of Whitney’s stock. Show in detail the profit from your portfolio if between today and the deal being completed, Denali’s stock price falls to $20.

Assuming yourself to be Anna, narrate what you would have read in the file. Your narrative should include answers to the following: Note: 1 Retention ratio = 1 – Dividend payout ratio a) What is the current Dividend per share (DPS) for Chatterbox Inc., assuming a 100% dividend payout policy?

Need both question. ....don't attempt if you will not solve both questions. .......

Consider the following information for the two companies, SpaceC and Alexa:    SpaceC Alexa      Shares outstanding 100 50      Price per share $50  $30 SpaceC is considering acquiring Alexa. It estimates that in doing so the synergistic benefit would be $200. Alexa says that it would accept an offer to be sold at $35 per share. Should SpaceC proceed and purchase Alexa? At what price would SpaceC be indifferent to making the acquisition of Alexa? Assuming the acquisition was at $35, what level of synergies (not $200) would there have to be to make the acquisition make sense for SpaceC? ( explain perfectly with step by step and type the answers) .

Explain  well all point  of question  with  proper  answer.

Amy Tanner is an analyst for a US pension fund. Her supervisor has asked her to value the stocks of General Electric (GE) and General Motors (GM) Tanner wants to evaluate the appropriateness of the dividend discount model (DDM) for valuing GE and GM and has compiled the following data for the two companies from 211 to 2018. GE GM EPS ($) DPS ($) pay-out EPS ($) Ratio DPS ($) Year рay-out Ratio 2018 2.17 1.15 0.53 -68.45 1.00 -0.01 2017 1.99 1.03 0.52 -3.5 1.00 -0.29 2016 1.76 0.91 0.52 -18.5 2.00 -0.11 2015 1.61 0.82 0.51 4.94 2.00 0.40 2014 1.55 0.77 0.50 5.03 2.00 0.40 2013 1.51 0.73 0.48 3.35 2.00 0.60 2012 1.41 0.66 0.47 1.77 2.00 1.13 2011 1.27 0.57 0.45 6.68 2.00 0.30 For each of the stocks, do a critical analysis and suggest whether the DDM is appropriate for valuing the stocks.

NEED ALL QUEST.... You would like to purchase one ClassA share of Berkshire Hathaway through your TD Ameritrade brokerage account. TD Ameritrade advertises a $5 commission for trades using their​ phone-based interactive voice response system. You call and learn that the bid price is ​$285,705.59 and the asking price is $285,909.62​ , and you submit your order for one share.   a. The current​ bid/ask spread for Berkshire Hathaway Class A shares is ​$________ ​(Round to the nearest​ cent.)   b. If TD Ameritrade routes your buy order to the​ NYSE, the potential minimum for your total transaction costs is $________ ​(Round to the nearest​ dollar.)   c. If TD Ameritradevroutes your buy order to​ NASDAQ, the potential maximum for your total transaction costs is $________ ​(Round to the nearest​ cent.)   d. Regardless of how your trade is​ executed, based on the​ bid/ask spread, the market value of your trade is $________ ​(Round to the nearest​ cent.)

The database is mentioned in the attachment:Ques) Draw a profit diagram for an investor in a call option with an exercise price of 64 that expires in March and explain the diagram. Undertake the same analysis for the writer of the call. Comment on the contention that options are a zero sum game for the writer and investor in options.

Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares outstanding 4,600 1,000 Price per share $ 40 $ 14 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,800. If Firm T is willing to be acquired for $16 per share in cash, what is the NPV of the a. merger? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) What will the price per share of the merged firm be assuming the conditions in b. (a)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) If Firm T is willing to be acquired for $16 per share in cash, what is the merger c. premium? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) d. Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for…

a) Assume we are now in mid- or late February 2022. After conducting your own analysis, you have made a decision to buy shares of ENV in March. However, your friend, Jaden who is a financial advisor for ENV tells you that ENV's earnings for the fourth quarter 2021 is higher than the analyst estimates. He suggests you to buy its shares immediately (i.e. in midor late February 2022) before this information is announced to the public (and price increases). Please state and explain which CFA Institute Code and Standards Jaden has breached.    b) [Behavioural finance] After getting this information from Jaden, you refuse to take a position in the stock today and decide to continue to wait until March to buy it. What is the best terminology to describe your behaviour?

a) Assume we are now in mid- or late February 2022. After conducting your own analysis, you have made a decision to buy shares of ENV in March. However, your friend, Jaden who is a financial advisor for ENV tells you that ENV's earnings for the fourth quarter 2021 is higher than the analyst estimates. He suggests you to buy its shares immediately (i.e. in midor late February 2022) before this information is announced to the public (and price increases). Please state and explain which CFA Institute Code and Standards Jaden has breached.    b) [Behavioural finance] After getting this information from Jaden, you refuse to take a position in the stock today and decide to continue to wait until March to buy it. What is the best terminology to describe your behaviour?    Answer only B

JPix management is considering a stock split. JPix currently sells for$120 per share and a 3-for-2 stock split is contemplated. What will be thecompany’s stock price following the stock split, assuming that the split hasno effect on the total market value of JPix’s equity?

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Let's say I decide to sell 1 call option through an account, but this account will only let me do this if you I already own the stock (a “covered call”), so I buy 500 shares of Company A and then proceed to sell a call option on Company Say this short call option expires in-the-money. What does in-the-money mean in this context? What will I have to do as the seller of this call option if the option expires in-the-money? And what about if it expires out-of-the-money?

You are working for Medical Equipment Exports Group. Your corporation is going to pay an annual dividend of $5 per share and an extra dividend of $1.5 per share in 4 weeks. The company’s stock is currently listed and actively traded on the ASX. Required: The standard process of settlement in ASX is T+2. If tomorrow is the record date for dividend payment for Medical Equipment Exports Group, when is the ex-dividend date for trading of this share on the ASX? Calculate the ex-dividend price if the corporation’s closing price the day before ex-dividend date is $143.5, assuming the dividend flat tax rate is 17%. Medical Equipment Exports Group has an extra cash of A$645,000. The AUD/USD exchange rate in New York is 0.74659. The USD/AUD rate in Sydney is 1.38127. Is there any arbitrage profit possible? Set up an arbitrage scheme with the extra cash. What is the potential gain in the AUD dollar, disregarding bid-ask spread? Medical Equipment Exports Group considers which method of dividend…

Assume you entered a 1,500 share short position in Pollution Co. at $37/share, which is the only position currently in this trading account. The initial margin you were required to post was 50% and the maintenance margin is 35%. b. If the share price does rise just enough to trigger a margin call,(i) how much margin will remain in the account when you receive the margin and (ii) how much additional cash will you be required to contribute to the account in order to maintain the short position?

There is an option involved strategy named “Ratio call writing”. It is the strategy when one owns a certain number of shares of the underlying stock and simultaneously sells calls against more shares than one owns. Therefore, there is a ratio of calls written to stock owned. The most common ratio is the 2:1. For example a 2:1 ratio can be established by buying 100 shares of ABC at $49 per share and selling 200 ABC October 50 calls at $6. What is the profit/loss of the above “ratio call writing” strategy when stock price at October expiration is $37, $45 and $63, respectively?

You would like to sell 220 shares of Echo Global Logistics, Inc. (ECHO). The current ask and bid quotes are $15.44 and $15.39, respectively. You place a limit sell order at $15.43.If the trade executes, how much money do you receive from the buyer?

Attached are the following data for a listed company:Ques) Draw a diagram illustrating a straddle, using calls and puts expiring in March and an exercise price of 64. Explain why an investor might consider it worthwhile to invest in a straddle and comment on the expected profitability of such an investment.

Presently, your company’s Face Value of Equity Share RO 10 and Market Value of your Share in MSM is RO 25 per share. In order to increase the trading volume and market liquidity of your company stock, will you suggest the management to go for stock split? Explain your management about concept of stock slip with the advantage of splitting the stock of your company with the current scenario.

You are an investment adviser. One of your clients approaches you for your advice on investing inequity shares of Theta Company. You have collected the following data:Earnings per share last year $6.00Payout ratio 0.40Return on equity 0.30Cost of equity capital 0.20The company plans to increase the payout ratio to 60% from year 5.Required:i) Estimate the price of an equity share of this company using an appropriate dividenddiscount model and advise your client whether they should buy a share of the company.ii) Your client is keen to know whether there are any growth opportunities from theirinvestment. Explain to your client the meaning of this concept using appropriatecalculations.iii) If there are positive or negative growth opportunities, explain the reason for suchopportunities.

You would like to sell 260 shares of Xenith Bankshares, Inc. (XBKS). The current ask and bid quotes are $4.44 and $4.40, respectively. You place a limit sell order at $4.43. If the trade executes, how much money do you receive from the buyer? (Round your answer to 2 decimal places.)

he NFF Corporation has announced plans to acquire LE Corporation. NFF is trading for $ 64 per​ share, and LE is trading for $ 13 per​ share, implying a​ pre-merger value of LE of approximately $ 6.7 billion. If the projected synergies are $ 2.07 ​billion, what is the maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV​? Question content area bottom Part 1 The maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV is    enter your response here. ​(Round to three decimal​ places.)

please help i cant fogure what im doing wrong for the last question