Options and warrants are dilutive if a. exercise price is lower than average market prices b. exercise price is higher than average market prices c. exercise price is equal to the average market prices d. option shares represent 20% of the common shares outstanding
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Options and warrants are dilutive if
a. exercise price is lower than average market prices
b. exercise price is higher than average market prices
c. exercise price is equal to the average market prices
d. option shares represent 20% of the common shares outstanding
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- Currently the common stock is selling for $13; the yield on nonconvertible bonds is 10%, and the yield on comparable preferred stocks is 14%. What is the value of the above securities in terms of the common stock? What would be the value of each security if it lacked the conversion feature? Please Give Step by Step Answer Otherwise I give DISLIKES !!A trader has established a short straddle on shares of ABC ltd at sh 5 each for a put option and a call option and a strike price of sh 50. Required: Compute the profits on expiration if the shares are selling at sh 20 sh 40 sh50 sh60 sh 70Perpetual preferred stock sells for $97.50 per share, and it pays an $6.85 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC? a. 7.32% b.6.25% c. 8.01% d.5.18% e. 4.11%
- The current market price for common shares of ABC Company is $25. Call options on these shares currently trade at 1.50, and come with an $30 exercise price. If the stock’s market price rose to $35 what would be the dollar payoff? your answer should like this: 4.00 that is not the right answerAssume that a financial institution (FI) has purchased 3,500 shares of AB and 7,500shares of CD. The share’s AB current bid and offer are £48.5 and £50.1 respectivelywhile the share’s CD current bid and offer are £101.1 and £101.5 respectively. Supposefurther that the bid–offer spreads are normally distributed with a mean and a standarddeviation of 1% for AB and with a mean of 3% and a standard deviation of 4% for CD.a) Which of the two shares (AB and CD) has the higher cost in terms of execution?Explain b) Calculate the cost of liquidation in a normal market c) Calculate the cost of liquidation in a stressed market at a 95% confidence level.Using your answers to (b), what do you observe?II. Consider a European call option on a non-dividend-paying stock. The following tableshows the value (in £), the delta (Δ), the gamma (Γ) and the theta (Θ) for a longposition in one option: (see the image) a) Using the numbers in the table, if there is an increase of £0.5 in the stock price,explain…Company A prefers stock selling for 97% of par that pays an 8% annual coupon. What would be company's component cost of preferred stock?
- Nico Trading Corporation is considering issuing preferred stock. The preferred stock would have a par value of R75 and a preferred dividend of 7.5 percent of par. In order to issue the stock, Nico trading would have to pay flotation costs of 6 percent of par value. Given this information, Nico Trading's cost of preferred stock would be 7.5 percent. Is this true or false?Perpetual preferred stock sells for $97.50 per share, and it pays an $4.85 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC? A. 4.11% B. 5.18% C. 8.01% D. 7.32% E. 6.25%Giant has preferred stock selling for 124.6 percent of par that pays a 10.4 percent annual coupon. What would be Giant's component cost of preferred stock?
- There are only shares of A and B companies in the market. Currently, the market value of A and B shares is $200 million and $300 million, respectively. In addition, the risk-free interest rate (Rf) is 5 per cent. The probability and rate of return for the future state of the two entities are given as follows: (Value values with a decimal place or higher to the fifth decimal place.) 1) Obtain the expected return and variance of Entity A and B, respectively. 2) When forming a market portfolio with two shares, obtain the expected return rate and variance and standard deviation of the market portfolio. 3) Calculate the beta of share A, and calculate the required yield of share A. state probability Ra Rb 1 0.3 0.30 0.20 2 0.4 0.15 -0.10 3 0.3 0.05 0.10Ekblad Corp. preferred stock is selling for $100 per share in the market. This preferred stock has a par value of $120 and a dividend rate of 15 percent. What is the current yield on the stock? If an investor has a required rate of return of 18 percent, what is the value of the stock for that investor? Should the investor acquire the stock? Explain why preferred stock is referred to as a hybrid security.The total book value of WTC's equity is $13 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 9%. The firms bonds have a face value of $9 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 7% andthe firm's tax rate is 21%. What is the company's WACC? (Don't round intermediate calculations, enter final answers as a percent rounded to 2 decimal places.)