ARE143_CHAP_3_KEY

ARE143_CHAP_3_KEY - 1 Managerial Economics (ARE) 143...

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1 Managerial Economics (ARE) 143 University of California, Davis Instructor: John H. Constantine KEY—Chapter 3 Problem 1: (a) What are the distinguishing features of a money market instrument ? The two distinguishing characteristics are: (1) all money market instruments are debt instruments (i.e., IOUs), and (2) all have less than 12 months to maturity when originally issued. (b) Why is preferred stock “preferred”? Preferred stockholders have a dividend preference and a liquidation preference. The dividend preference requires that preferred stockholders be paid before common stockholders. The liquidation preference means that, in the event of liquidation, the preferred stockholders will receive a fixed face value per share before the common stockholders receive anything. Problem 2: YTD Yld Vol Net %Chg Hi Lo Stock (SYM) Div % PE 100s Close Chg -16.70 32.37 18.90 DRK DRK 0.30 1.30 16 2855 ?? 0.26 52 Weeks You are given the above stock quote for DRK Enterprises, Inc., at your favorite web site.
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This note was uploaded on 01/13/2012 for the course ARE 143 taught by Professor Brinkley,g during the Spring '08 term at UC Davis.

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