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NEW QUESTION 28
A corporation has $80 million in current assets comprised of $30 million in inventory and $50 million in cash and marketable securities it has current liabilities of $50 million. If the corporation purchases an additional $10 million in inventory with trade credit this would
Answer: B
NEW QUESTION 29
A group of nations is considering me formation of a cartel associated with the manufacture and distribution of a product that they each export. Which one of the following outcomes would not be consistent with me formation of a carter?
Answer: C
NEW QUESTION 30
The best discount rate to the use for evaluate of investment opportunities is the
Answer: D
NEW QUESTION 31
Define the term structure of interest rates and explain now it could impact QDD's objective of obtaining the lowest coupon rate Essay Quality Digital Design (QDD) Inc is a public-traded technology company Selected financial data of QDD for the prior year are as follows
QDD's stock was trading at $160 per share at the beginning of the yea: and at $176 per share by the end of the year. The company paid dividends of S5 per share. The company "s stock had a beta of 1 4 The stock market provided a total return of 12% last year, well above the 3% risk free rate of return QDD is considering the issuance of $200 million of bonds to fund the repurchase of $200 million of its stock.
QDD is evaluating the bond, including its term structure, maturity, and whether it should be callable obtaining the lowest coupon interest is an important objective of QDD. The CFO has estimated that sales for the current year would remain the same as last year and the new bond would add S12 million in annual interest payments.
Answer:
Explanation:
See the explanation for the answer.
Explanation
* A callable bond allows companies to pay off their debt early and benefit from favorable interest rate drops
* A capable bono benefits the issuer and so investors of these bonds ate compensated vutn a more attractive interest rate than on otherwise similar non-callable bonds However callable bones are more expensive The term structure of interest rates reflects the expectations of market participants about future changes in interest rates and their assessment of monetary policy conditions in general terms yields increase in line with maturity, giving rise to an upard-sloping or normal yield curve
NEW QUESTION 32
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