Stock A has a beta of 0.5 and stock B has a beta of 1. Which statement is NOT correct?
The US firm Google operates in the online advertising business. In 2011 Google bought Motorola Mobility which manufactures mobile phones.
Assume the following:
- Google had a 10% after-tax weighted average cost of capital (WACC) before it bought Motorola.
- Motorola had a 20% after-tax WACC before it merged with Google.
- Google and Motorola have the same level of gearing.
- Both companies operate in a classical tax system.
You are a manager at Motorola. You must value a project for making mobile phones. Which method(s) will give the correct valuation of the mobile phone manufacturing project? Select the most correct answer.
The mobile phone manufacturing project's:
A furniture distributor offers credit to its customers. Customers are given 25 days to pay for their goods, but if they pay immediately they will get a 1% discount.
What is the effective interest rate implicit in the discount being offered? Assume 365 days in a year and that all customers pay either immediately or on the 25th day. All rates given below are effective annual rates.
In the dividend discount model:
###P_0 = \dfrac{C_1}{r-g}###
The return ##r## is supposed to be the:
Find the sample standard deviation of returns using the data in the table:
| Stock Returns | |
| Year | Return pa |
| 2008 | 0.3 |
| 2009 | 0.02 |
| 2010 | -0.2 |
| 2011 | 0.4 |
The returns above and standard deviations below are given in decimal form.
Which firms tend to have low forward-looking price-earnings (PE) ratios? Only consider firms with positive PE ratios.
A firm has a debt-to-equity ratio of 25%. What is its debt-to-assets ratio?
Question 860 idiom, hedging, speculation, arbitrage, market making, insider trading, no explanation
Which class of derivatives market trader is NOT principally focused on ‘buying low and selling high’?