Discuss the validity of risk diversification as a motivation for companies engaging in merger and acquisition activity?

Q: 75. Insurance companies wouldn’t exist unless customers were willing to pay the price of the insuran...

A: Insurance : Insurance can be understood as a contract under which a person or business obtains finan...

Q: 10. Three years from now you will sell 10 ounces of gold and immediately deposit the proceeds for tw...

A: The future value of Investment is calculated using compounding the interest rate on the initial Inve...

Q: the operating profitability ratio of company a is 2%. the return on invested capital is 10%. what is...

A: Return on invested capital (ROIC) is a calculation used to assess a company's efficiency at allocati...

Q: If the expected inflation rate is 3.45%, the realized real rate of return is 3.80%, and the actual i...

A: Expected Inflation Rate is 3.45% Realized Real Rate of Return is 3.80% Actual Inflation Rate is 2.15...

Q: Why should stock market investors ignore specific risks when calculating required rates of return? O...

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Q: Buy house using a 15-year fixed mortgage. Willing to pay up to $3,000 per month in monthly mortgage ...

A: Determine the present value of the loan taken using the Excel PV function with the following inputs:...

Q: Isaac borrowed $5.000 at 125% compounded quarterly 3.5 years ago. One year ago he made a payment of ...

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Q: Question: Tatsumi invested Php 10,000 now for the college education of his three-year old son. If th...

A: Investment made (X) = Php 10000  Let's find the future value of this investment after 15 years (At s...

Q: On March 15, year 1, ABC Corporation adopted a plan to accumulate P1,000,000 by September 1, year 5....

A: There are 2 types of annuity:- A) Ordinary Annuity B) Annuity in Advance   A) Ordinary Annuity:- Whe...

Q: Question 1- Texas Instruments (TXN) (please include your Excel spreadsheet file!) Actual data for Te...

A: An Investment is an asset with the goal of generating Income. Investors get return from the Investme...

Q: What is the yield to maturity of a bond with the following characteristics; all have a maturity of 1...

A: Face value (F) = 10000 Coupon (C) = (4% of 10000) / 2 = 200 n = 10 years = 20 semiannual periods r =...

Q: Craig’s Driving School’s 2013 balance sheet showed net fixed assets of $3.9 million, and the 2014 ba...

A: For calculation of net capital spending we can use below mentioned formula. Net capital spending = C...

Q: You have the following data on three stocks: Stock Standard Deviation Beta A. 0.15 0.79 0.25 0.61 C ...

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Q: Rank the following from highest present value to lowest present value. Assume they all have the same...

A: Lets assume that the rate of interest is 10% Lump sum - $1000 Time – 10 yrs r- 10% Present Value  ...

Q: Financial markets promote economic efficiency by * A.channeling funds from investors to savers. B. c...

A: Answer  -    The financial system performs the essential economic function of channeling the funds o...

Q: Assume that you want to deposit an amount (BD120,000.00) into an account three years from now in ord...

A: Time Value of money: Money received today is worth more than money received later, according to the ...

Q: You found that opening your own cake shop is a worthwhile project. After scouting around you found o...

A: Capital Budgeting is required to evaluate whether to continue with an investment decision or not. Th...

Q: Return on Assets, or ROA, can be expressed as the product of two ratios.  Which two?

A: Return on Assets: It refers to the ratio that measures the profitability of the company with respect...

Q: It is now January 1. You plan to make a total of 5 deposits of $600 each, one every 6 months, with t...

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question s...

Q: Is there a reason to pick one over the other? 1. FCFF=CFO +Int (1-Tax rate) - FCInv 2. FCFF=NI + NCC...

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Q: A credit union's Rate-Climber GIC pays rates of 2%, 2.5%, and 3% compounded semiannually in successi...

A: Future value of a present value is the value of that amount after taking into account the time value...

Q: Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over....

A: For One-year The rate will be same as current one year rate or 1R1

Q: To calculate free cash flow to equity (FCFE), the analyst needs which of the following:

A: Cash Flow From Operations (CF0): It refers to the amount of money coming in and going out of the com...

Q: a) Calculate the NPV assuming 10% discount rate b) Determine in which year will be the payback c) Ca...

A: Net Present Value: It represents the difference between the present worth of annual cash flows and t...

Q: Panyaroad Plc has just paid a dividend of USD 8 per share. The market value of share is USD 93. The ...

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question...

Q: d) Calculate Leland's cost of common equity using the Security Market Line.

A: Calculate the beta of the stock (β) by dividing the covariance of stock with the market (Cov L,M) wh...

Q: ariance of Bobsled Inc. is 2.5 and the variance of Luge Inc. is 1.6, in a market with a variance of ...

A: Expected return and variance of portfolio can be calculated from the weighted return of each stock i...

Q: Jenny has no assets, but she has $1,000 to invest in one of two stocks. Stock A has a beta of 1.2 an...

A: One of the approaches for determining the needed rate of return for equity capital is to utilize the...

Q: In 2020, the two bend points for computing Social Security’s Primary Insurance Amount (PIA) are $960...

A: Primary Insurance Amount is one of the parts of Social Security Rules in the US. This is a kind of b...

Q: A bond currently trades at P975 on the secondary market. The bond has 10 years until maturity and pa...

A: The yield to maturity of the bond can be calculated with the help of RATE function of Excel

Q: Your employer has offered to contribute $50 a week to your retirement savings account. Assume you wo...

A: Number of weeks (n) = 15 years x 52 weeks = 780 Weekly interest rate (i) = 8.5%/52 = 0.16346153846% ...

Q: In 1983 the average tuition for one year at an Ivy League school was $11,800. Thirty years later, in...

A: Growth rate is used in time value of money which shows the increase in nominal value of an asset or ...

Q: What is your net dollar sales projection for this year?

A: Sales: It represents the amount of money received from the firm's normal operations. Sales are also ...

Q: The Hohner Marine Band harmonica retailed for €30 in Germany (see Exhibit 2). German retailers gener...

A: Contribution per unit is the difference between the selling per unit and the variable cost per unit....

Q: Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at a...

A: Here, Cost of Debt (rd) is 9% Weight of Debt is 35% Weight of Equity is 65% Dividend (D0) is $1.85 G...

Q: Johnson & Johnson Corporation has plan to diversify their business. One is to open a fast-food resta...

A: The given question relates to Capital Budgeting. Payback period is the period in which the capital i...

Q: Question 1: Know your numbers! You are a student at the University of North Anywhere. There are thre...

A: The cost price index shows the effect of inflation on the economy. It is one of the ways to calculat...

Q: Once capital markets are integrated, it is difficult for a country to maintain a fixed exchange rate...

A: Capital markets are places where money is exchanged between people who supply capital and those who ...

Q: Suppose we are pricing a five-year Libor-based interest rate swap with annual resets (30/360 day cou...

A: The fixed rate of the swap can be calculated by deducting the present value of final year (Z N) and ...

Q: 1. Over the past year, your friend Maura has been saving up for an epic road trip to travel across t...

A: Sound Financial Decisions are those decisions which are taken or which exhibits strength in the area...

Q: A trader creates a bear spread by selling a six-month put option with a $25 strike price for $2.15 a...

A: Stock price is $23. Premium paid for put option $2.15. Strike price of put option is $25. Buying put...

Q: What amount three years ago is equivalent to $5,100 on a date 1.5 years from now if money earns 4% c...

A: The time value of money(TVM) shows the increase in nominal value of an asset over time because of in...

Q: Selected financial data for Fey Company is presented below.

A: A tax shield is a decrease in taxable income accomplished by an individual or organization by claimi...

Q: BNG Inc. has cash of $16,300, inventory of $56,400, accounts receivable of $128,366, accounts payabl...

A: Accounting Equation shows the relationship between assets, liabilities, and equity of the company. I...

Q: Buffelhead's stock price is $192 and could halve or double in each six-month period. A one-year call...

A: Hai there! Thank you for the question. Question has multiple sub parts. As per company guidelines ex...

Q: Which of the following is NOT among key trends affecting the banking industry? O Convergence O ESG f...

A: The banking business consists of a network of financial entities known as banks that assist consumer...

Q: A trader creates a bear spread by selling a six-month put option with a $25 strike price for $2.15 a...

A: Strike Price of Short Put Option is $25 Strike Price of Long Put Option is $29 Premium received on s...

Q: This exercise is designed to be solved using technology such as calculators or computer spreadsheets...

A: Loan is a value which is borrowed from external sources like banks and this amount is repaid later i...

Q: A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company’s di...

A: Cost of equity = Risk-free rate + Beta(Market risk premium) Cost of equity = 0.075 + 1.2(0.04) Cost ...

Q: An interest-bearing note for 118 days at 6.4% p.a. simple interest has a face value of $4053. If the...

A: Notes are issued to discount that is interest and number of days to maturity of note. Proceeds from ...