Question
KMS Corporation has assets with a market value of $404 million, $27 million of which are cash. It has debt of $178 million, and 18
KMS Corporation has assets with a market value of $404 million, $27 million of which are cash. It has debt of $178 million, and 18 million shares outstanding. Assume perfect capital markets.
a. What is its current stock price?
b. If KMS distributes $27 million as a dividend, what will its share price be after the dividend is paid?
c. If instead, KMS distributes $27 million as a share repurchase, what will its share price be once the shares are repurchased?
d. What will its new market debt-equity ratio be after either transaction?
e. Use the data table to estimate the alpha of Nike and HP Inc. stock, expressed as % per month.
The estimated monthly alpha for Nike is nothing%. (Round to two decimal places.)The estimated monthly alpha for HP Inc. is nothing%.(Round to two decimal places.)
| Monthly Returns |
| ||||||
| Date | Nike | HP Inc. | S&P 500 | ||||
| Jan-11 | minus3.442% | 8.527% | 2.330% | ||||
| Feb-11 | 7.941% | minus4.509% | 3.474% | ||||
| Mar-11 | minus14.624% | minus5.913% | minus0.005% | ||||
| Apr-11 | 8.745% | minus1.465% | 2.896% | ||||
| May-11 | 2.587% | minus7.406% | minus1.121% | ||||
| Jun-11 | 6.915% | minus2.301% | minus1.706% | ||||
| Jul-11 | 0.189% | minus3.379% | minus2.000% | ||||
| Aug-11 | minus3.882% | minus25.988% | minus5.498% | ||||
| Sep-11 | minus0.958% | minus13.292% | minus6.910% | ||||
| Oct-11 | 12.677% | 18.530% | 10.915% | ||||
| Nov-11 | minus0.176% | 5.036% | minus0.406% | ||||
| Dec-11 | 0.572% | minus7.406% | 1.024% | ||||
| Jan-12 | 7.907% | 8.618% | 4.637% | ||||
| Feb-12 | 3.779% | minus9.543% | 4.341% | ||||
| Mar-12 | 0.815% | minus5.373% | 3.214% | ||||
| Apr-12 | 3.163% | 3.903% | minus0.668% | ||||
| May-12 | minus2.977% | minus8.401% | minus6.006% | ||||
| Jun-12 | minus18.857% | minus10.750% | 4.045% | ||||
| Jul-12 | 6.345% | minus9.299% | 1.183% | ||||
| Aug-12 | 4.681% | minus7.456% | 2.505% | ||||
| Sep-12 | minus2.516% | 1.848% | 2.543% | ||||
| Oct-12 | minus3.719% | minus18.816% | minus1.820% | ||||
| Nov-12 | 6.675% | minus6.209% | 0.566% | ||||
| Dec-12 | 6.299% | 10.716% | 0.902% | ||||
| Jan-13 | 4.748% | 15.860% | 5.119% | ||||
| Feb-13 | 1.147% | 21.987% | 1.276% | ||||
| Mar-13 | 8.355% | 19.027% | 3.795% | ||||
| Apr-13 | 7.778% | minus13.591% | 1.921% | ||||
| May-13 | minus2.720% | 18.544% | 2.361% | ||||
| Jun-13 | 3.276% | 2.150% | minus1.340% | ||||
| Jul-13 | minus1.193% | 3.548% | 5.168% | ||||
| Aug-13 | 0.175% | minus13.006% | minus2.999% | ||||
| Sep-13 | 15.632% | minus5.394% | 3.176% | ||||
| Oct-13 | 4.295% | 16.103% | 4.631% | ||||
| Nov-13 | 4.461% | 12.228% | 2.964% | ||||
| Dec-13 | minus0.329% | 2.834% | 2.580% | ||||
| Jan-14 | minus7.363% | 3.645% | minus3.525% | ||||
| Feb-14 | 7.811% | 3.034% | 4.552% | ||||
| Mar-14 | minus5.671% | 8.785% | 0.829% | ||||
| Apr-14 | minus1.232% | 2.163% | 0.695% | ||||
| May-14 | 5.757% | 1.331% | 2.321% | ||||
| Jun-14 | 0.832% | 1.015% | 2.064% | ||||
| Jul-14 | minus0.542% | 5.730% | minus1.344% | ||||
| Aug-14 | 2.152% | 6.712% | 3.946% | ||||
| Sep-14 | 13.558% | minus6.237% | minus1.371% | ||||
| Oct-14 | 4.226% | 1.156% | 2.355% | ||||
| Nov-14 | 6.798% | 8.863% | 2.747% | ||||
| Dec-14 | minus2.880% | 3.149% | minus0.253% | ||||
| Jan-15 | minus4.056% | minus9.968% | minus2.963% | ||||
| Feb-15 | 5.583% | minus3.570% | 5.620% | ||||
| Mar-15 | 3.305% | minus10.103% | minus1.566% | ||||
| Apr-15 | minus1.485% | 5.809% | 0.983% | ||||
| May-15 | 3.147% | 1.304% | 1.286% | ||||
| Jun-15 | 6.246% | minus9.623% | minus2.018% | ||||
| Jul-15 | 6.665% | 1.699% | 2.259% | ||||
| Aug-15 | minus3.012% | minus8.060% | minus6.095% | ||||
| Sep-15 | 10.291% | minus8.104% | minus2.533% | ||||
| Oct-15 | 6.554% | 5.271% | 8.506% | ||||
| Nov-15 | 0.954% | 2.422% | 0.366% | ||||
| Dec-15 | minus5.262% | minus4.593% | minus1.729% | ||||
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Forensic Accounting
Authors: Greg Shields
1st Edition
1727480988, 978-1727480986
