Chapter 6
Problems 2, 10, 15, 17, 21
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COCACOLA
Financial Management - 1 Instructor: Francis Ikeokwu
COCA COLA
Introduction
The Coca-Cola Company is the world's leader in the production and marketing of non-alcoholic
beverages. Net sales break down by activity as follows: - sale of beverages (
Chapter 5
Problems 3, 5, 8, 11, 14
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Chapter 19
Problems 2, 4, 6, 10
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NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installed in Ex
COCACOLA
Financial Management - 1 Instructor: Francis Ikeokwu
COCA COLA
Introduction
The Coca-Cola Company is the world's leader in the production and marketing of non-alcoholic
beverages. Net sales break down by activity as follows: - sale of beverages (
MARGINAL ANALYSIS
Managerial Economics - 2 Instructor: Fahlino Sjuib
Many say marginal analysis is the key to economic analysis that is used to maximize
the benefit of the output of production in which can allocate consumers resources.
Precisely, it is a
Calculating Investment Returns
You bought one of Bergen Manufacturing Cos 7 percent coupon bonds one year ago for
$1,080.50. These bonds make annual payments a mature six years from now. Suppose
you decide to sell your bonds today when the required return
"To obtain maximum satisfaction from a limited money income, a consumer allocates
money income so that the marginal utility per dollar spent on each good is the same for
all commodities purchased, and all income is spent" (textbook, page 180). Let's apply
Chapter 11
Problems 4, 6, 17, 18
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1. If the company benefits from the provision of the bond, then the coupon rate will
be higher. If the bondholders benefit, then the bond will have lower coupon rate.
a. Bonds with collateral will have lower coupon rate as bondholders
have claim on collat
1. Two-State Option Pricing Model T-bills currently yield 4.8 percent. Stock in Nina
Manufacturing is currently selling for $63 per share. There is no possibility that the stock will
be worth less than $61 per share in one year.
a. What is the value of a
MARKET FAILURE
Managerial Economics - 2 Instructor: Fahlino Sjuib
World market existed from the basic economics of supply and demand theory where
demand is the amount or quantity of goods or services that buyers are willing to pay at
certain price in exch
MARKET STRUCTURES
Managerial Economics - 2 Instructor: Fahlino Sjuib
A market system is any process enabling many buyers and sellers to buy and sell
goods and services. In general, markets are grouped in to four structures such as
monopoly, oligopoly, mon
Chapter 16
Problems 2, 6, 12, 16
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1. The implications that can be drawn from the given graph are:
a. The actively managed funds have consistently outperformed the low fee index funds
over the past decade of January 1977 through December 1986.
b. Although the economic conditions over the d
BARRIERS TO ENTRY
Managerial Economics - 2 Instructor: Fahlino Sjuib
Barrierstoentry
Before a firm can compete in a market, it has to be able to enter it. Many markets have
at least some impediments that make it more difficult for a firm to enter a market
PRICE DISCRIMINATION
Managerial Economics - 2 Instructor: Fahlino Sjuib
Price discrimination is part of the commercial and business world. Movie theaters,
magazines, computer software companies, and thousands of other businesses have
discounted prices for
Chapter 17
Problems 1, 2, 3, 6, 10
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5. Valuing Callable Bonds KIC, Inc., plans to issue $5 million of bonds with a coupon
rate of 8 percent and 30 years to maturity. The current market interest rates on these
bonds are 7 percent. In one year, the interest rate on the bonds will be either 10
RISK AVERSION
Managerial Economics - 2 Instructor: Fahlino Sjuib
Risk aversion
Risk aversion is described as an investor who and when faced with two investments
with a similar expected return (but different risks), will prefer the one with the lower risk.
Chapter 20
Problems 6, 12
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T
Chapter 21
Problems 4, 7, 12
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Binomial option pricing is based on a no-arbitrage assumption, and is a mathematically
simple but surprisingly powerful method to price options. Rather than relying on the
solution to stochastic differential equations (which is often complex to implement)
Kudler Strategy
Kudler Strategy
Your name
University
Class
Instructor
Date
1
Kudler Strategy
2
Introduction
Kudler Fine Foods is one of the gourmet food shops which built in 1998 and the owner is
Kathy Kudler. The company products include beverages and go
1. We can use the Black-Scholes equation to value the employee stock
options. We need to use the risk-free rate that is the same as the maturity as
the options. So, assuming expiration in three years, the value of the stock
options per share of stock is: