The stock valuation model, P0 = D1/ (i - g), can be used for firms which have negative growth rates. 4. Company J and Company K each recently reported the same earnings per share (EPS). Company J’s stock, however, trades at a higher price. Which of the following statements is most correct?
You win a dollar if the proportion of red marbles is larger than that of blue marbles, that is, if you get a proportion > 0.5 of reds. We know by the law of averages that chance error relative to the number of draws = (proportion of reds you get)- (proportion of reds expected) gets smaller and smaller as n increases. So use that to decide between the choices. So n=200 will get you closer to the true proportion of reds ( > 1/2) than n=100, and therefore n=200 will get you closer to winning the $1. p.286.
There are two basic reasons. First, the choice of units when absolute changes are used will have an arbitrary effect on the interpretation of responsiveness. For example, if price is calculated in dollars, then a one-unit drop in price (from $5 to $4) might be associated with a 10-unit increase in quantity. If, however, the price was calculated in cents, then a 100-unit drop in price would be associated with a 10-unit increase in quantity. In the first case, it would appear the demand is inelastic and in the second case it would appear to be elastic.
Using the data from attachments 10-11 (provided below), compute the optimal portfolio allocations if the portfolio mean return objective is 6.4% with some constraints (all weights sum to 100%, weights on cash >= -50% and weights on all other asset classes >=0) and the investor wishes to minimize standard deviation. What is the standard deviation and sharpe ratio of this portfolio? 11. Repeat for returns of 4.4-9.4% with increments of .5% (a total of 11 optimizations, e.g. 4.4, 4.9, 5.4… 9.4).
Talbots was willing to pay more than the fair value of the tangible assets acquired from J. Jill, because J. Jill had intangible assets that worth some money. The liabilities assumed by Talbots in the acquisition of J. Jill were current liabilities of $55,662,000, deferred income taxes of $95,699,000, debt for this acquisition of $400,000,000 and other long-term liabilities of $11,820,000, which was $563,181,000 in total. Journal entries required when Talbots recorded the purchase of J. Jill ($ amounts in thousands) Debt Cash 400,000 Credit Debt 400,000 Credit Cash 524,391 Debt Deferred income taxes 30,445 Other current assets 19,475 Property and equipment 91,837 Goodwill 211,977 Trademarks 79,100 Other intangible assets 100,185 Credit Current liabilities 55,662 Deferred income taxes 95,699 Other long-term liabilities 11,820 For Fiscal Year 2007 (ending February 3, 2007), the amortization of goodwill and other intangible assets planned by Talbots when it purchased J. Jill on May 3, 2006 Goodwill will not be amortized and will be reviewed for impairment on an annual basis or when events indicate that the asset may be impaired. Accumulated amortizations for customer relationships,
(b) (1) LIFO will yield the lowest gross profit because this method will yield the highest cost of goods sold figure in the situation presented. The company has experienced rising purchase prices for its inventory acquisitions. In a period of rising prices, LIFO will yield the highest cost of goods sold because the most recent purchase prices (which are the higher prices in this case) are used to price cost of goods sold while the older (and lower) purchase prices are used to cost the ending inventory. (2) LIFO will yield
$900,000 / $150,000 = 6 5. $1,200,000 / $1,200,000 = 1 6. $300,000 / $1,200,000 = 0.25 7. 1.2(($280,000 - $290,000)/$1,200,000) + 1.4($60,480/$1,200,000) + 3.3($126,000/$1,200,000) + .6(0) + 1($1,200,000//$1,200,000) = 1.40616 PART D – CONCLUSION In the Debt-Equity Ratio, the value of 0.53 means over half of the equity in the company is going to the debt that company has accumulated. Overall in this example, this is a risky investment.
Second, Cost of Equity should be found. Cost of Equity is different for different countries, but it uses US risk free rate and risk premium rate because all debt is financed in USD. Risk free rate is 4.5%, which is 10 year US Treasury Bond, US risk premium is 7%. Using the equation: Cost of Equity =risk free rate +leveraged beta* US risk Premium, we have the cost of equity of Red Oak is 0.07393, the cost of equity of Caracoles is 0.1041. Third, Cost of Debt=Risk free rate+ Default Spread.
What are the weak spots in the northeast district's performance? Refer to Tables 5 and 6. The northeast district has a weak spot because in order to make a greater gross profit they have to have a greater amount of sales then the north-central district. In order to make a $520 profit district C for the northeast would have to have $1,620 in sales. In the same district C the north-central would only have to have $1,304 in sales to have a $510 profit.
Financiering 6012B0217 Financiering Case 2012/2013 Vraag 1 a) Excel regression (ongecorrigeerde beta) equity beta van ING: 1.972874 ASML: 1,002967 Ahold: 0,395736 b) We know that there is a linear relationship between the stock beta and its expected return. So, if there is fewer stock the security market line will be steeper so, the beta will be smaller. Vraag 2 ßu = ßa= (E/(D+E)) x ße Net debt: Interest Bearing Debt – Cash and Cash Equivalents ING: 47284/(1234038+47284) x 1,972874 = 0,07280 Debt: 1247110-13072=1234038 ASML: 2773908/(1456616+2773908) x 1,002967 = 0,65763 Debt: 3406450-1949834=1456616 Ahold: 5910/(6215+5910) x 0,395736 = 0,192891 Debt: 8815-2600=6215 Vraag 3 a) ASML has a higher asset beta because it participates in an market which develops faster, so it has a higher systematic risk. Ahold has a lot of more diversity on his business. Ahold can better spread his risk.