Business Finance Help for College and University Students

Dividends' effect on firm's value

Which of the following factors does not contribute to dividends' effects on a firm's value? a. Corporate taxes b. Transactions costs c. Flotation costs

working capital investment

The optimal level of working capital investment is the level that is expected to: a. maximize earnings per share b. maximize investment value c. minimize interest expenses

Credit extended

Credit extended in connection with goods purchased for resale is called: a. commercial paper b. bank loans c. trade credit

payment plans

Which of the following statements is true of the relative attractiveness of the two proposed payment plans to the firm? a. the variable fee could be increased beyond $.25 per check and that plan could still be preferable b. the fixed fee plan is more attractive c. none fo the above

sum of NPV

The sum of the NPV's of a merger to each of the two firms involved: a. cannot exceed the pre-merger value of both firms b. it always zero c. is equal to the additional value attributable to the merger

value of currency

Which of the following actions would not tend to increase the value of a country's currency? a. relatively low interest rates b. government trade policies that limit imports c. srlatively low rate of inflation

theory of interest rate parity

The theory of interest rate parity states that the annual percentage differential in the forward market for a currency quated in terms of another currency is equal to the approximate difference in _______ prevailing in the two countries a. interest rates b. trade deficit rates c. GNP growth rates

Cross-exchange rates

A dealer in Australia quotes A$1.7430-40/$, A dealer in Paris quotes $0.8610-20/euro. A dealer in Germany quotes euro 0.6667-76/A$. What should the German dealer quote to prevent any arbitrage?

put option on international currency

There is a put option on the euro with an exercise price of $0.54/euro and it expires in three months and is trading at 1.55 cents per euro. The minimum contract size is euro32,000. What would be the net payoff to the buyer and the seller of the put if the spot price at expiration is $0.71/euro, and what is the break-even rate ...continues

The spot exchange rate for the euro is $1.6750/euro on Jan 1, 2003.

The spot exchange rate for the euro is $1.6750/euro on Jan 1, 2003. A U.S. investor bought euro1,000,000 on Jan 1 and sold it six months later (june 1). A German investor bought $1,000,000 on Jan 1 and sold it six months later (june1). What should the $/euro rate have been on June 1 for the UK investor to make the same prof ...continues