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3 years ago

In an FRA, the buyer agrees to pay the seller

1 answer:

8 0

C.

A Forward Rate Agreement (FRA) is an OTC rate derivative in which the buyer will pay or receive at maturity the difference between a fixed rate and a reference interest rate applied onto either a borrowing or lending (the notional is never exchanged), for a specific period of time.

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Scubapro Corporation currently has 500,000 shares of common stock outstanding and plans to issue 200,000 more shares in a season

Ivan

Answer:

Scubapro Corporation

The investor who currently has 20,000 shares has the right to buy this number of shares, if she exercises her preemptive right:

E) 8,000 shares.

Explanation:

Data and Calculations:

Outstanding common stock = 500,000

Planned issue of additional shares = 200,000

Proportion of new issue to outstanding = 0.40 (200,000/500,000)

For an investor with 20,000 shares, she has the right to buy 8,000 (20,000 * 0.40) additional shares.

3 0

2 years ago

Turnbull Co. is considering a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in c

Anna35 [415]

Answer:

11.06%

Explanation:

Calculation to determine What will be the WACC for this project

First step is to calculate the Weight of Debt

Weight of Debt = $750,000 / $1,708,000

Weight of Debt = 0.4391

Second step is to calculate the Weight of Preferred Stock

Weight of Preferred Stock = $78,000 / $1,708,000

Weight of Preferred Stock = 0.0457

Third step is to calculate the Weight of Equity

Weight of Equity = $880,000 / $1,708,000

Weight of Equity = 0.5152

Fourth step is to calculate After Tax Cost of Debt

After Tax Cost of Debt = 11.1% * (1 – 0.40)

After Tax Cost of Debt = 6.66%

Now let calculate WACC using this formula

WACC = (Weight of Debt * After Tax Cost of Debt) + (Weight of Preferred Stock * Cost of Preferred Stock) + (Weight of Equity * Cost of Equity)

Let plug in the formula

WACC = (0.4391 * 0.0666) + (0.0457 * 0.1220) + (0.5152 * 0.1470)

WACC = 0.02924406+0.0055754+0.0757344

WACC =0.1106*100

WACC =11.06%

5 0

2 years ago

Suppose your bank pays you 4 percent interest per year on your savings account, so that $1,000 grows to $1,040 over a oneminu

Fed [463]

Answer:

3 percent which is $30

Explanation:

The real value of money is measured against a basket of goods or services, or against a particular product or service. The real value is adjusted for inflation. In other words, the real value of money is its nominal value adjusted for inflation.

If the bank pays an interest rate of 4 percent, which leads to an increase of savings from $1000 to $1040, should prices increase by 1 percent, then the real value of money has increased by 3 percent. One percent increase in prices represents inflation. Keeping $1000 in the bank will earn a 3 percent real value or $30.

8 0

2 years ago

What is one major disadvantage of a capital formation strategy that focuses only on high risk investments

Troyanec [42]

Answer:

It increases the chance that the investment will lose all value.

Explanation:

If you go for a risky investment, it could increase the chance of it being a waste of time and money to sum it all up. But the answer you seek is, "It increases the chance that the investment will lose all value."

8 0

2 years ago

All of the following are public relations tools except:______

Montano1993 [528]

Answer:

b. coupons and rebates.

Explanation:

Public Relations Tools or PR tools are a way for a specific company or organization to communicate with the public and media in order to control information, advertise products/services, and even gain exposure in a market. This is done through the use of many tools such as

Media relations
Advertorials
Social media
Newsletters
Brochures and catalogs
Business events
Speaking engagements
Sponsorships or partnerships

This does not include coupons and rebates which are used simply to garner more sales for a company

8 0

3 years ago