Answer:
Option b. A and B are conditionally independent given C2.
Explanation:
The conditional probability of an event is the probability that a given event will occur given that another event, say A has already occurred.
In a case where events A and B are independent (in this case, where the probability of A has no effect on the probability of B occurring), the conditional probability of an event B given that A has taken place is simply the probability of the event A.
If the two events are not independent, then the probability of an event occurs as an intersection of set A and B.
Answer:
a. Suppose GP issues $ 100$100 million of new stock to buy back the debt. What is the expected return of the stock after this transaction?
b. Suppose instead GP issues $ 50.00$50.00 million of new debt to repurchase stock. i. If the risk of the debt does not change, what is the expected return of the stock after this transaction?
ii. If the risk of the debt increases, would the expected return of the stock be higher or lower than when debt is issued to repurchase stock in part (i)?
- If the risk of the debt increases, then the cost of the debt will increase. Therefore, the company will need to spend more money paying the interests related to the new debt which would decrease the ROE compared to the 18% of (i). Since we do not know the new cost of the debt, we cannot know exactly by how much it will affect the ROE, but I assume it will still be higher than the previous ROE.
Explanation:
common stock $200 million
total debt $100 million
required rate of return 15%
cost of debt 6%
current profits = ($200 million x 15%) + ($100 x 6%) = $30 million + $6 million = $36 million
if equity increases to $300 million, ROI = 36/300 = 12
if instead new debt is issued at 6%:
equity 150 million, debt 150 million
cost of debt = 150 million x 6% = $9 million
remaining profits = $36 - $9 = $27 million
ROI = 27/150 = 18%
The trading bloc consisting of 28 trading partners in Europe is the EUROPEAN UNION. European Union is a political and economic alliance among 28 countries members that located primarily in Europe. Some of the members are: Germany, Poland, Italy, United Kingdom, France, Belgium, Netherlands, etc.
I feel stressed reading this question as it has no context but the question is asking for your opinion. there really is no wrong answer
It is ethical to report the wrongdoing of a coworker. Which means the answer is false. Hope this helped!
