Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ook int Consider the table shown below to answer the question posed in part a. Parts b and c are independent of the given

image text in transcribedimage text in transcribedimage text in transcribed

ook int 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 Callaway Golf (ELY) Alaska Air Group (ALK) Yum! Brands (YUM) Caterpillar Tractor (CAT) Microsoft (MSFT) Share (millions) X Stock Price Market Capitalization ($ millions) 94.2 X 27.30 123.7 X 50.70 301.7 543.3 7,560 103.07 X 186.66 $ 2,572 $ 6,272 $ 31,096 $ 101,412 X 242.12 $ 1,830,427 Check my w ences a. The price of Yum! Brands stock has risen to $160. What is the market value of the firm's equity if the number of outstanding shares does not change? Note: Enter your answer in dollars not in billions of dollars. b. The rating agency has revised Catalytic Concepts' bond rating to AA (use Table 2.2). What interest rate, approximately, would th company now need to pay on its bonds? Note: Enter your answer as a percent rounded to 1 decimal place. c. A farmer and a meatpacker use the commodity markets to reduce their risk. One agrees to buy live cattle in the future at a fixed price, and the other agrees to sell. Which one sells? a. Market value b. Interest rate 54,384 17% 1 of 4 Next > Problem 2-18 Functions of Financial Markets (LO3) Consider the table shown below to answer the question posed in part a. Parts b and c are independent of the given table. Callaway Golf (ELY) Alaska Air Group (ALK) Yum! Brands (YUM) Caterpillar Tractor (CAT) Microsoft (MSFT) Number of Share (millions) Market Capitalization X Stock Price ($ millions) 94.2 X 27.30 123.7 X 50.70 301.7 543.3 7,560 X 103.07 E X X 186.66 242.12 $ 2,572 $ 6,272 $ 31,096 $ 101,412 $ 1,830,427 a. The price of Yum! Brands stock has risen to $160. What is the market value of the firm's equity if the number of outstanding shares does not change? Note: Enter your answer in dollars not in billions of dollars. b. The rating agency has revised Catalytic Concepts bond rating to AA (use Table 2.2). What interest rate, approximately, would the company now need to pay on its bonds? Note: Enter your answer as a percent rounded to 1 decimal place. 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 Prev 1 of 4 PERSAL Next > Microsoft (MSFT) 77560 242.12 $1,836,421 Es for indicate completion. Return to question a. The price of Yum! Brands stock has risen to $160. What is the market value of the firm's equity if the number of outstanding shares does not change? Note: Enter your answer in dollars not in billions of dollars. b. The rating agency has revised Catalytic Concepts bond rating to AA (use Table 2.2). What interest rate, approximately, would the company now need to pay on its bonds? Note: Enter your answer as a percent rounded to 1 decimal place. 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? Answer is complete but not entirely correct. a. Market value $ 54,536 b. Interest rate 1.6 % c. Which one sells? A farmer Prev 1 of 4 Next

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Derivatives And Risk Management

Authors: Don M. Chance, Robert Brooks

10th Edition

130510496X, 978-1305104969

More Books

Students also viewed these Finance questions

Question

Implement the method contains() for BST.

Answered: 1 week ago

Question

he profit-maximizing rule MC = MR is followed by firms under

Answered: 1 week ago