Mucho Macho is the leading beer in Patagonia, with a 65 percent share of the market. Because of
trade barriers, it faces essentially no import competition. Exports account for less than 2 percent
of sales. Although some of its raw material is bought overs
American Airlines is trying to decide how to go about hedging _70 million in ticket sales
receivable in 180 days. Suppose it faces the following exchange and interest rates.
Forward rate (180 days):
DM 180-day interest rate (annual
A proposed foreign investment involves a plant whose entire output of 1 million units per annum
is to be exported. With a selling price of $10 per unit, the yearly revenue from this investment
equals $10 million. At the present rate of exchange, dollar co
Cooper Inc., a U.S. firm, has just invested 500,000 in a note that will come due in 90 days and
is yielding 9.5% annualized. The current spot value of the pound is $1.5612 and the 90-day
forward rate is $1.5467.
What is the hedged dollar value of this
Hilton International is considering investing in a new Swiss hotel. The required initial investment
is $1.5 million (or SFr 2.38 million at the current exchange rate of $0.63 = SFr 1). Profits for the
first ten years will be reinvested, at which time Hilt
In 1990, General Electric acquired Tungsram Ltd., a Hungarian light bulb manufacturer.
Hungary's inflation rate was 28 percent in 1990 and 35 percent in 1991, while the forint
(Hungary's currency) was devalued 5 percent and 15 percent, respectively, durin
In 1985, Japan Airlines (JAL) bought $3 billion of foreign exchange contracts at 180/$1 over 11
years to hedge its purchases of U.S. aircraft. By 1994, with the yen at about 100/$1, JAL had
incurred over $1 billion in cumulative foreign exchange losses on
Biotechnology: Day 2 Prelab worksheet
1) What do you think would happen if you put your gel in the apparatus backwards (i.e. the wells by the
positive (red) electrode)? Why?
2) All proteins from your corn sample will bind to the plastic wells. Exp
NAME: _ Lab partner/s: _
Biotechnology Lab Report
1) Insert your gel image in the space below.
Label each of the lanes with the sample name
Label each band of the molecular weight standard with the appropriate molecular weight.
2) Which of your samples
Assume the Knight Corporation is considering the acquisition of Day Inc. The expected
earnings per share for the Knight Corporation will be $4.00 with or without the merger.
However, the standard deviation of the earnings will go from $2.40 to $1.60 with
Chicago Savings Corp. is planning to make an offer for Ernies Bank & Trust. The stock
of Ernies Bank & Trust is currently selling for $44 a share.
a. If the tender offer is planned at a premium of 50 percent over market price, what will be
the value offer
The Hollings Corporation is considering a two-step buyout of the Norton Corporation. The
latter firm has 2.5 million shares outstanding and its stock price is currently $40 per share.
In the two-step buyout, Hollings will offer to buy 51 percent of Norton
General Meters is considering two mergers. The first is with Firm A in its own volatile
industry, the auto speedometer industry, while the second is a merger with Firm B in an
industry that moves in the opposite direction (and will tend to level out perfo
The Jeter Corporation is considering acquiring the A-Rod Corporation. The data for the
two companies are as follows:
a. The Jeter Corp. is going to give A-Rod Corp. a 60 percent premium over A-Rods
current market value. What price will it pay?
b. At t
Al Simpson helped start Excel Systems in 2010. At the time, he purchased 116,000 shares of
stock at $1 per share. In 2015, he has the opportunity to sell his interest in the company to
Folsom Corp. for $50 a share in cash. His capital gains tax rate would
J & J Enterprises is considering a cash acquisition of Patterson Steel Company for
$4,500,000. Patterson will provide the following pattern of cash inflows and synergistic
benefits for the next 20 years. There is no tax loss carryforward.
Assume the following financial data for the Noble Corporation and Barnes Enterprises:
a. If all the shares of the Noble Corporation are exchanged for those of Barnes Enterprises
on a share-for-share basis, what will postmerger earnings per
Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for
$1.6 million. Medical Labs will provide the following pattern of cash inflows and
synergistic benefits for the next 25 years. There is no tax loss carryforwar
Assume the following financial data for Rembrandt Paint Co. and Picasso Art Supplies:
a. If all the shares of Rembrandt Paint Co. are exchanged for those of Picasso Art Supplies
on a share-for-share basis, what will postmerger earnings per
Suppose a change in expectations regarding future U.S. inflation causes the expected future spot
rate to decline to $1.52:1. What should happen to the U.S. interest rate?
If rus is the unknown U.S. interest rate, and assuming that the British inter
What is the price of a perpetuity that has a coupon of $50 per year and a yield of 2.5%? If the yield
doubles, what happens to the price?
PV = 50/2.5% = $2,000. If the yield doubles then the PV is cut in half PV = 50/5% = $1,000.
Property taxes in DeKalb County are roughly 2.66% of the purchase price every year. If you just bought a
$100,000 home, what is the PV of all future property tax payments? Assume that the house remains
worth $100,000 forever, property tax rates never chan
The annualized discount rate on a particular money market instrument is 3.75%. The
face value is $200,000 and it matures in 51 days. What is its price? What would be the price if it
had 71 days to maturity?
If it matures in 51 days its price woul
What was the purpose motivating regulators to impose interest ceilings on bank savings accounts? What
effect did this eventually have on the money markets?
Following the Great Depression, regulators were primarily concerned with stopping banks from
Distinguish between competitive bidding and non-competitive bidding for Treasury
A treasury auction will sell a certain face amount of securities. The non-competitive bids will all
settle at the yield dictated by the auction. Thus th
Why are more funds from property and casualty insurance companies than funds from
life insurance companies invested in the money markets?
Life insurance companies can invest for the long term because the timing for their liabilities is
Distinguish between a term security and a demand security?
Term securities have a specific maturity date. Demand securities can be redeemed at any time. A
six-month certificate of deposit is a term security. A checking account is a demand security.