Question
Consider the table shown below to answer the question posed in part a. Parts b and c are independent of the given table. Number of
Consider the table shown below to answer the question posed in part a. Parts b and c are independent of the given table.
| Number of Share (millions) | ? | Stock Price | = | Market Capitalization ($ millions) | ||||||||||||
| Callaway Golf (ELY) | 94.6 | ? | $ | 16.36 | = | $ | 1547.66 | |||||||||
| Alaska Air Group (ALK) | 123.4 | ? | $ | 61.96 | = | $ | 7645.86 | |||||||||
| Yum! Brands (YUM) | 332.5 | ? | $ | 85.13 | = | $ | 28,305.73 | |||||||||
| Caterpillar Tractor (CAT) | 147.4 | ? | $ | 597.63 | = | $ | 88,090.66 | |||||||||
| Microsoft (MSFT) | 7,705.0 | ? | $ | 91.27 | = | $ | 703,235.35 | |||||||||
a. The price of Yum! Brands stock has risen to $165. What is the market value of the firm?s equity if the number of outstanding shares does not change? (Enter your answer in billions rounded to 3 decimal places.)
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b. The rating agency has revised Catalytic Concepts? bond rating to AAA (use Table 2.2). What interest rate, approximately, would the company now need to pay on its bonds? (Enter your answer as a percent rounded to 1 decimal place.)
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c. A farmer and a meatpacker use the commodity markets to reduce their risk. One agrees to buy live cattle in the future at a fixed price, and the other agrees to sell. Which one sells?
A farmer
A meatpacker
TABLE 2.2 Interest rates on long-term corporate bonds, May 2018. The interest rate is lowest for top-quality (AAA and AA) issuers. The rate rises as credit quality declines. Credit Rating Interest Rate AAA AA A BBB BB B 3.5% 3.5 3.8 4.3 5.1 6.5 Source: ICE Bank of America Merrill Lynch Indices.
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Organic Chemistry structure and function
Authors: K. Peter C. Vollhardt, Neil E. Schore
6th edition
142920494X, 978-1429204941
