Finance Answers

Smith and Wesson have written a new managerial economics book for which they receive royalty payments of 15 percent of total revenue from sales of the book. Because their income is tied to revenue, not profit, they want the publisher to set the price so that the total revenue is maximized. However the publishers objective is maximum profit. If the total revenue function is TR=100,000Q-10Q^2 and the total cost function is TC=10,000+20Q+Q^2 determine A) the output rate that will maximize total royalty revenue and the amount of royalty income hat smith and Wesson would receive. B) the output rate that would maximize profit to the publisher. Based on this rate of output, what is the amount of royalty income smith and Wesson would receive? Compare the royalty income of smith and Wesson to that determined in part (a).

An investor is considering the purchase of a share of a company .The stock will pay a$ 3 dividend a year from today.This dividend is expected to grow at 10 % per year for the unforeseeable future .The investor thinks that the required return on the value of this stock is 15%. Given this assessment calculate the value of a share of the company's stock.

(i) Find the price of bond with a coupon rate of 12% having 5 years to maturity. Its par value is 10,000 Br and the discount rate is 12%.
(ii) Supposing interest rates fall to 8% what will be the price of the bond?

Calculate the price of bond with a coupon rate of 12% having 5 years to maturity. Its par value is 10,000 dollars and the discount rate is 12%

Hi.

Is it a fact that producing insecurity and conflict in the Middle East would cause oil prices go up?
If yes, how does it work?

Thank you.

Stock X and Y have the following probability distributions of expected future returns:

Probability ------- X -------- Y
0.15 -10% -20%
0.20 2 0
0.30 10 20
0.20 20 25
0.15 30 40

1)Calculate the expected rate of return for both stocks.
2)Calculate the standard deviation for both stocks.
3)Which stock is risky and why?

An investor currently holds the following portfolio:
Amount
Invested
8,000 shares of Stock A $16,000 Beta = 1.3
15,000 shares of Stock B $48,000 Beta = 1.8
25,000 shares of Stock C $96,000 Beta = 2.2
The investor is worried that the beta of his portfolio is too high, so he wants to sell
some Stock C and add Stock D which has a beta of 1.0 to his portfolio. If the investor
wants his portfolio to have a beta of 1.72, how much Stock C must he replace with
Stock D?

Sweatshirt Inc’s ROE is 20%. It’s dividend payout ratio is 70%. The last dividend, just
paid, was RM2.00. If its dividends are expected to grow at the company's internal
growth rate indefinitely, what is the current value of the company's common stock if
its required return is 18%?

In 2000 Jengka Inc. issued bonds with an 8 percent coupon rate and a RM1,000 face
value. The bonds will mature on March 1, 2025. If an investor purchased one of
these bonds on March 1, 2012, determine the yield to maturity if the investor paid
RM1,100 for the bond.

Power of Tower Inc. has bonds that mature in 6½ years with a par value of RM1,000.
They pay a coupon rate of 9% with semiannual payments. If the required rate of
return on these bonds is 11% what is the bond's current value?