Its economics questions, answer all.

You are a director of Piron plc, a large manufacturing company based in the UK. The

company produces electronic products for the world market and has branches in Europe

and Asia. It is financed by a mixture of equity (ordinary and preference shares) and

debt (debentures and unsecured loan stock) finance. The company now wishes to

expand its range of products and needs further funds for investment. As a director, you

will have to contribute to the discussion of the various financial options open to the

company.

(i) One of the options being considered is a rights issue. Consider the advantages

and disadvantages of a rights issue for Piron plc. [6]

(ii) The Finance Director has suggested that the company could issue Eurobonds.

Consider the advantages and disadvantages of Eurobonds for Piron plc. [6]

(iii) What other financial options are available for Piron plc? [3]

(iv) What factors will you consider when making your decision?

Ehcample 2.3.3. A certain US. life ofce conducted an investigation into the mortality of the holders of its "smoker\" and \"nonsmoker\" life assurance policim. The following figures refer to medically er-camined lives (males and females combined). smokers nonsmokers actual expected actual expected deaths deaths deaths deaths The \"expected deaths\" were obtained on the basis of the 1955313 Select Basic Table; that is1 the expected deaths in respect of a given sea:1 age and duration were obtained by multiplying the central exposed to risk by the appropriate central death rate {according to the standard table}.| and then aggregating over all smokers and nonsmokers respectively. Assume that the force of mortality of smokers is 1'11 times the force of mortality of the standard table (for the same age and duration)1 and that the corresponding factor for nonsmokers is 1'12. {i} Using a 5% signicance level1 tat the null hypothesis that oil = :22. {ii} Calculate the p-value of the test-statistic used in (i). {iii} Find estimated standard deviations of 21 and d2. {iv} Find an approximate 95% condence interval for {11 1'12. Example 2.7.1. {i} Dene the term Area. Comparability Factor. {ii} {a} The following table shows the population enumerated at a census on 39th June 1932 in a certain country which conducts censuses every ten years, and also in a certain district, B, within that country, together with the numbers of deaths during the census year for the whole country. Age-group COUNTRY DIETHICT B {age last No. of birthday} Population deaths Population 5, 1'99 ,999 599,999 10,500,000 1,000,000 5,500,000 550,000 2,010,000 250,000 25,000,000 305,010 2,500,000 The National Health Service of the country distributes money for 1939 to the various districts in proportion to the quantity FszSMR where P denotes the total estimated mid-year population in the district in 1933 and 3MB denotes the estimated 3MB of the district in 1933, using the whole country in the most recent census year as the standard population. Tb estimate the SMR of each district in non-census years, the National Health Service uses Area Comparability Factors. Show that F is proportional to HKAUF where H is the total number of deaths in the district in 1933, and ASP is the Area, Camparabiiity Factor of the district