In an efficient market how are we to interpret FedEx’s 14% increase in market value? a. In 2004 the stock price of both companies rose. FedEx’s stock price rose 13.9% during this this time, whereas UPS only saw a 3.1% increase. The stock prices rose because the air transportation agreement between United States and China and the market opportunities of this deal in China for FedEx and UPS.
What is your appraisal of Blockbuster’s performance as shown in case Exhibit 5? What pluses and minuses do you see? Use the financial ratios in Table 4.1 of Chapter 4 as a guide in doing the calculations needed to arrive at an analysis-based answer to your assessment of Blockbuster’s recent performance. 10. How does
Why did the stock price of FedEx outpace UPS after 2004? What does this say about the two firms entering a new market? Both stock prices for FedEx and UPS rose after 2004 because of the air transportation agreement between China and the US. There was a great deal of market opportunity during this time in China for both companies. FedEx had high stock prices because they had a larger presence in China then UPS did.
True b. False 2(9-2) Classified stock F G Answer: a EASY [ii]. Classified stock differentiates different classes of common stock, and using it is one way companies can meet special needs such as when owners of a start-up firm need additional equity capital but don't want to relinquish voting control. a. True b.
For each priority in question 3, describe the unique characteristics of the market niche with which it is most compatible. A few years ago, the dollar showed relative weakness with respect to foreign currencies such as the yen, euro, and pound. This stimulated exports. Why would long-term reliance on a lowervalued dollar be at best a short-term solution to the competitiveness problem? In your opinion, do business schools have competitive priorities?
The net profit for a company in 2009 – This would be quantitative as well since we are seeing the actual profit number for the company. c. The stock exchange on which a company’s stock is traded. – This would be a qualitative element since all we are doing here is categorizing the companies stocks. d. The national debt of the US in 2009. - This would be quantitative as well since we are seeing the national debt for the country.
Net Present Value The NPV or Net Present Value is the difference in the present value of the way cash flows in and the present value of the way cash flows out. NPV takes into consideration the returns and inflation as it compares the future value of a dollar to the current value of a dollar. Using NPV in capital budgeting, each company is able to determine if an investment of a project should be taken into consideration. Positive cash flow for any investments or projects happen when the NPV is positive. Both Company A and Company B question future cash flows that will be generated over the first five years of operation.
Do historical betas provide good measures of the future riskiness of firms (or divisions)? 3. Using the computed beta, find the cost of equity, the weighted average cost of capital (WACC), and the hurdle rate for the company. Discuss the negative impact of the added premium to the cost of capital. 4.
? How does systematic risk differ from unsystematic risk? What is meant by the Capital Asset Pricing Model? Describe how it relates to expected return and risk. Find the real return on the following investments: Stock Nominal Return Inflation A 10% 3% B 15% 8% C -5% 2% ?
2. Given the following Euro to $ Exchange rate of 1.46, what is the information contained in this quote? If the Purchasing Power Parity Theory is correct, what is true about the relationship between the US dollar and the Euro at this exchange rate? 3. A US multinational company is required to report its financial results in US dollars.