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1. Define a Special Purpose Acquisition Company (SPAC).
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- Market efficiency primarily concerned with how well the financial market reflects all the available financial information in the prices of the shares of listed companies. * True or False?explain the two types of risks, and explain the two types of diversification of idiosyncratic tisks1.Which of the following best describes the demand of a flu vaccine? A.Demand for flu vaccine is driven driven by reported cases. B. Demand for flu vaccine is sensitive of to income C. Demand for flu vaccine is sensitive to price. D. Demand for flu vaccine is perfectly elastic perfectly. E. None of the options provided. 2. stock EPS share price Growth rate A $0.30 $4.80 4% B $0.40 $5.50 6% C $0.50 $7.50 7% D $0.60 $8.00 5% Using the PEG ratio, rank the stocks in order of investment opportunity, the first having the best, the last having the worst. A. C,B,D,A B. A,D,B,C C. C,D,B,A D. B,D,C,A
- If you are the financial analyst hired to look into credit risk of the hypothetical corona groceries before vaccine bank will lend them a loan, what will you do to provide vaccine bank with the information needed by them.Q1) In September 2013, Tokyo Electric Power Company (Tepco) reported highly contaminated water leaking from a storage tank at the Fukushima nuclear power plant crippled in a March 2011 earthquake and tsunami. From what you know of the ongoing Fukushima disaster, discuss the various stakeholder groups that Tepco should respond to in order to handle this latest crisis. Q2) Is it ethical and socially responsible for large corporations to lobby against an SEC rule requiring that they report the ratio of their CEOs’ pay compared to that of their average employee, as described in the chapter? Discuss. Q3) A survey found that 69 percent of MBA students view maximizing shareholder value as the primary responsibility of a company. Do you agree? What do you think this finding suggests about the ethical and socially responsible stance of corporate managers over the next couple of decades? Should We Go Beyond the Law? Nathan Rosillo stared out his…When a company decides to sell its stock to the public for the first time, it hires the services of a broker or brokerage firm. True or False
- Semi-Salt Industries began its operation in 1975 and remains the only firm in the world that produces and sells commercial-grade polyglutamate. While virtually anyone with a degree in college chemistry could replicate the firm’s formula, due to the relatively high cost, Semi-Salt has decided not to apply for a patent. Despite the absence of patent protection, Semi-Salt has averaged accounting profits of 5.5 percent on investment since it began producing polyglutamate—a rate comparable to the average rate of interest that large banks paid on deposits over this period. Do you think Semi-Salt is earning monopoly profits? Why?Critically evaluate the view that the large movements in prices for Unity Software shares in the first six months of trading undermine the relevance of the dividend valuation model and the concept of market efficiency. First trading Day = USD $68.35 One month = USD $89.30 3 months = USD $157.77 6 months = USD $101.67Explain how the total revenue maximization objective can create principal-agency problem in the firm. How can the problem be solved ?
- (a) Is there an arbitrage? Suppose an investment firm sells options. (b) What is the t=0 price (premium) of a call option on stock 2 with exercise price E=12? (c) What is the t=0 price (premium) of a put option on stock 1 with exercise price E=23? Suppose a start-up company wants to go public. The firm has total costs of $100,000 at date t=1 and sales of $120,000 in state 1, $230,000 in state 2, and $140,000 in state 3. The firm wants to issue 1,000 IPO shares. (A share is endowed with a cash flow right of 0.1% of the total profits of the firm.) (d) The underwriter suggests an IPO price of $40 per share. Will this IPO be successful, i.e. will there be a positive demand for the shares?True or False: The licensing and regulation of financial advisers is one way by which the government tries to deal with the problem of inadequate information that financial firms have about their customers.For problems 1 – 5, use a discount rate of 10%. 1.What would be the value of an asset that returns a cash flow of $1000 one year from now? 2.What would be the value of an asset that returns a cash flow of $1000 in each of the next five years starting one year from now? 3.What would be the value of an asset that returns a cash flow of $100 in each of the next five years starting one year from now plus an additional $1000 at the end of the fifth year? 4.What would be the value of an asset that returns a cash flow of $100 in each of the next five years starting one year from now and $200 per year in years six through ten? 5.What would be the value of an asset that returns a cash flow of $100 each year forever starting one year from now?
