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Unformatted text preview: Picture 1 Picture 2 Picture 3 Picture 4 Picture 5 Picture 6 Picture 7 Picture 8 Picture 9 Picture 10 Picture 21 Picture 2 Picture 23 Picture 24 Picture 25 Picture 26 Picture 3 Picture 36 Picture 37 Picture 38 Picture 39 Picture 40 Picture 41 Picture 50 1 )If the corporate tax rate is 35%, what is the maximum effective tax rate on dividends received by another corporation? 10.5% 30% 20% 11.8% 10.3% 35% 21.9% 0% 21% 2) When a firm has no debt, then such a firm is known as: I) An unlevered firm I I) A levered firm I I I) An all-equity firm I and I I I only I I I only I I only I only I I and I I I only 3) Given the following data for U &P Company: Debt (D) = $100 million; Equity (E) = $300 Million; rD = 6%; rE = 12% and TC = 30%. Calculate the after-tax weighted average cost of capital (WACC): 4) Which of the following observations would provide evidence against the strong form of efficient market theory? I) Mutual fund managers do not on average make superior returns I I) In any year approximately 50% of all pension funds outperform the market I I I) Managers who trade in their own firm's stocks make superior returns I I I only I only I I and I I I only I and I I I only I I only 5) Analysis of past monthly movements in Wal-Mart's stock price has produced the following estimates: =-0.0066 and =1.85. If the market index subsequently rises by 5% one month and Wal-Mart's stock price rises by 3%, what is the expected change in Wal-Mart's stock price in percent? % If the market index subsequently rises by 5% one month and Wal-Mart's stock price rises by 3%, what is the abnormal change in Wal-Mart's stock price in percent? Picture 51 Picture 78 Picture 82 Picture 83 Picture 84 Picture 85 Picture 86 Picture 87 Picture 95 Picture 96 Picture 97 Picture 98 Picture 9 Picture 10 Picture 107 Picture 108 Picture 109 Picture 1 0 Picture 1 1 Picture 1 2 Picture 1 9 % [Hint: Make sure to give your answer in percent!] 6) A firm in Australia earns a pretax profit of $A30 per share. I t pays a corporate tax of $A9 per share (30% tax rate) in taxes. The firm pays the remaining cash in dividends to a shareholder in the 40% tax bracket. What is the amount of tax paid by the shareholder under the imputation tax system? $A 7) If firm U is unlevered and firm L is levered, then which of the following is t rue: I I I and I I I I only I I only I I I only I and I I only 8) Which of the following is a statement of weak form efficiency? I) If markets are efficient in the weak form, then it is impossible to make consistently superior profits by using trading rules based on past returns I I) If the markets are efficient in the weak...
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This note was uploaded on 12/04/2010 for the course FINANCE 6055 taught by Professor Wagner during the Spring '10 term at UniversitÃ Bocconi.
- Spring '10
- Corporate Finance