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FIFTH QUIZ
FNCE 238/738
November 16, 2011
WRITE ALL ANSWERS ON THE TEST.
IF YOUR ANSWER CONTINUES ON THE BACK,
MAKE A NOTE OF IT ON THE FRONT.
30 PTS / 25 MINUTES
NAME:_____________________________________________
SECTION (12, 1:30, 3):__________________________________
1.
(8 pts.) In ABS deals such as the CarMax deal we looked at, do all the dollars flowing into the
trust flow through to the notes it sold to the public?
Explain (in general; I’m not looking for the
exact details of any particular deal).
Key points
Trust has to pay servicing
Trust pays dividends back to the seller if it is current on its obligations
o
Has paid the coupons
o
And the servicing
o
Cash trapped by the reserve account is at the target balance
The seller does not have to give these dividends back, even if the trust later runs into problems
paying the notes down
2.
Yesterday, 11/15/11, the French healthcare provider ORPEA, which has 42.4 million shares
outstanding, announced a rights offering.
For every 4 shares an investor currently holds, he gets
one right to buy one new share for
€
19.15.
a.
(6 pts.) Given the current, pre-rights price per share of
€
30.89, what discount is the
subscription price from the theoretical ex-rights price?
Theoretical ex-rights price =[ (Current MV) + (Cash paid in through exercise of rights)]/(resulting #shrs)
=[ (42.4M shares)(
€
30.89/shr)+ (¼(42.4M shares))(
€
19.15/shr)]/(42.4M + ¼(42.4M )) = 28.542
So discount of subscription price is (28.542-19.15)/28.542=32.9%
b.
(2 pts.) A bank syndicate (BNP Paribas, Credit Agricole, Natixis, Societe Generale) is
underwriting the offering.
What risk to ORPEA does this address?
The underwriters will exercise the rights if shareholders do not.
S
o this addresses ORPEA’s risk that it
does not raise the money because its stock price falls below
€
19.15.
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3.
(7 pts.) Looking at the performance of open-end mutual funds, we see that the relation between
past and future performance is weak: the prospects of last year’s better performers are only
a
little better than the prospects of last year’s worse performers.
What does this tell us about
whether some managers are much better than others?
Explain.
In an open-end fund, investors directly expand and contract the fund by entering and leaving at NAV.
If
fund management exhibits decreasing returns to scale, then this expansion and contraction reduces and
increases the fund’s value added per dollar.
If investors are rational, they will move money from worse
to better prospects, and will continue to do so until their prospects equalize.
So if investors learn from
one year’s performance that one fund’s manager is much better than another’s, then they will leave the
latter for the former, rendering their expected future performance the same.
So there would be no
relation between past and future performance, even though some managers are much better than
others.
Thus the weak persistence we observe is not conclusive evidence against the idea that some
managers are much better than others.
4.
(7 pts.) Here are two follow-on stock offerings this year:
Dynavax
Announcement of the offering at the close of trading on Wednesday, November 2, 2011:
Dynavax
Technologies Corporation today announced that it intends to offer and sell shares of its common
stock, subject to market and other conditions, in an underwritten public offering.
Announcement of the pricing before the open of trading on Thursday, November 3, 2011:
Dynavax
Technologies Corporation today announced the pricing of a previously announced underwritten
public offering of 24,000,000 shares of its common stock, offered at a price to the public of $2.50
per share.
Aegerion
Announcement of the offering on Thursday June 16, 2011:
Aegerion Pharmaceuticals Inc. said
Thursday it filed paperwork with regulators for an offering of more than 4 million shares.
The
company will offer about 3.3 million shares, and stockholders will offer an additional 1 million
shares.
Announcement of the pricing on Friday June 24, 2011:
Aegerion Pharmaceuticals, Inc. announced the
pricing of the underwritten public offering of 4,250,000 shares of its common stock at a price to the
public of $15.50 per share. 3,250,000 of these shares are being offered by Aegerion and 1,000,000
of these shares are being offered by selling stockholders.
How do these offerings differ in the risk borne by the issuer vs. the investors?
The key difference is that the market was closed between the announcement and pricing of the Dynavax
deal, so the investors could not see how the market took the news of the offering, and therefore the
investors, rather than Dynavax, bore the risk of this market impact.
By contrast, eight days passed
between the announcement and pricing of the Aegerion deal, so the deal was priced with full knowledge
of this market impact, meaning Aegerion, rather than investors, bore this risk.
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What is the different of stock dividends, stock splits, and stock repurchase.
2. In the working capital management, we know about cash conversion cycle model. For
problem if average inventories are $3 million and sales are $11 million. If receivables are
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The future value of $200 received
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b. $158
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Salma wants to save money to open a tutoring center. She buys an annuity with a monthly payment of $27 that pays 3.7% interest, compounded
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Do not round any intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas.
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Question 8
Suppose you invest $120 a month for 5 years into an account earning 8% compounded monthly. After 5
years, you leave the money, without making additional deposits, in the account for another 23 years. How
much will you have in the end?
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three months. Deferred Revenue was credited on November 28.
2. On December 1, 2024, the company paid a local radio station $2,490 for 30 radio ads that were to be aired, 10 per month,
throughout December, January, and February. Prepaid Advertising was debited on December 1.
3. Employee salaries for the month of December totaling $7,300 will be paid on January 7, 2025.
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Consider the following situations for Shocker:
1. On November 28, 2024, Shocker receives a $3,450 payment from a customer for services to be rendered evenly over the next
three months. Deferred Revenue was credited on November 28.
2. On December 1, 2024, the company paid a local radio station $2,490 for 30 radio ads that were to be aired, 10 per month,
throughout December, January, and February. Prepaid Advertising was debited on December 1.
3. Employee salaries for the month of December totaling $7,300 will be paid on January 7, 2025.
Hint
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09 Operational and Legal Considerations -
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Calculating Capacity
• How many machines do you need?
• You expect your sales to be
3,000,000 granola bars (20g each)
• How large is your plant?
per month
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The machine:
• How much is the investment?
Capacity: 100 kgs per hour
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Takes 8 ft x 40 ft space
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Energy and maintenance: $5 per hour
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Question 7 of 13 - Module One
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Your first internship assignment is to prepare two schedules for Windsor Blue Co., a manufacturing company. You have a file that
contains a copy of last year's work for both schedules; you plan to follow the same format as last year, hoping the staff accountant had
it right. You also have access to the full set of financials for Windsor Blue, and you can dig further into any of the accounts via the
accounting system, too.
Here's the information you have pulled, with the same items as last year.
DM Inventory
WIP Inventory
FG Inventory
DM purchases
DL costs
Production supervisor salary
Utility costs in production space
Depreciation on manufacturing facility and equipment
Beginning of Year
End of year
$9,200
$10,000
21,000
13,000
6,300
8,000
153,000
232,000
56,000
14,000
42,000
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ring the first month of operations, Johnson Services, Ic., completed the following transactions:
(Click the icon.to view the transaction data.)
ead the requirements.
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s. Exclude explanations from journal entries.)
Lequirement 1. Record each transaction in the
Mar 2: Johnson Services received $62,000 cash
Mar 2 Johnson Services received $62,000 cash and issued common stock to the
Journal
stockholders.
Accounts
3 Purchased supplies, $600, and equipment, $11,400 on account.
Date
4 Performed services for a customer and received cash, $5,500.
7 Paid cash to acquire land, $38,000.
Mar
11 Performed services for a customer and billed the customer, $4,300. Johnson
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Year
1
2
3
4
5
O a. 3.77
Ob. 3.73
Oc. 3.89
Od. 3.96
Cash Out
$ (1,600,000)
(710,000)
Cash In
550,000
580,000
610,000
640,000
670,000
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Round your answers to two decimal places, if necessary.
At the beginning of each of the last three years, Lucas put $7,000 from his earnings as a waiter into a
college savings account that earned 1.7% interest compounded annually. Now he will spend an
estimated $21,600 to attend his local community college for 2 years and not take out a student loan.
Complete the table to determine whether Lucas has saved enough money to attend community college.
2
3
Year
1
Beginning balance
$0
Amount deposited
$7,000
$7,000
$7,000
New balance
$7,000
$
Amount of interest earneds
Ending balance
$
Lucas (select)
v enough money to attend community college.
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- A Final Exam - MATH 1330 - Math b Details | bartleby E New tab A https://www.webassign.net/web/Student/Assignment-Responses/submit?dep=254878928tags=autosave#question4023958_1 Sign in 12. DETAILS HARMATHAP12 6.2.009. MYΝΟΤΕS What are the future value and the interest earned if $4000 is invested for 3 years at 8% compounded quarterly? (Round your answers to the nearest cent.) future value 24 interest earned %24arrow_forward17.39 .. 90 PROBLEMS OF SEMESTER FINAL TEST 2021 Word es Mailings Review View Help O Tell me what you want to do Aa - AaBbCeDd AaBbCcl AaBbCcDe AaBbCcDe AaBt Heading 2 Heading 3 T Normal I No Spac. Headin Paragraph Styles 4.5.6 7 8.. 9. • 10. 11 12. 13. 14. 15.I Thursday : January 21, 2021 --- 80 Minutes 1. In this section we examine three theories of investor preference: The dividend irrelevance theory. The "bird in the hand" theory, the tax preference theory, which theory is the best? What is the different of stock dividends, stock splits, and stock repurchase. 2. In the working capital management, we know about cash conversion cycle model. For problem if average inventories are $3 million and sales are $11 million. If receivables are S 657.535 and sales are S 11 million. Then, if its cost of goods sold are $9 million per year and if its accounts payable average $ 657.535. What is the length of the cash conversion sicle? 3. The ELGRAJO Corporation has capital structure as follow…arrow_forwardCrop a question SIM ? 11:00 AM A elearning.ju.edu.jo The future value of $200 received today and deposited at 8 percent compounded semi-annually for three years is Select one: a. $352 b. $158 C. $253 d. $380 Previous page Next page Quiz navigation 4. 6. Finish attempt. Go Time left 0:19:14 IIarrow_forward
- P7arrow_forward5:42 AM Tue Nov 16 * 100% www-awu.aleks.coma Exam 2, 7.3-9.4 REVIEW Report Overall Assignment Score: 73% (Best Score) Ninotchka V Score. O O pont Submitteu. NOV Z 7.32 1 IVI Tme Spet. S s Español Incorrect Your answer is incorrect. Salma wants to save money to open a tutoring center. She buys an annuity with a monthly payment of $27 that pays 3.7% interest, compounded monthly. Payments will be made at the end of each month. Find the total value of the annuity in 10 years. Do not round any intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas. 圖 Answer Submitted: 00 $12345.92 Correct Answer: $3913.49 Assignments List EVEI IVIUIawll LLC. All Rights Reserved. Terms of Use Privacy Center Accessibility IIarrow_forwardHey I was wondering if I can get help with this thank youarrow_forward
- Eat min C e New tab Λ Content xW Quiz 3-MAT-143, section 03F, Fa X + Q A ✩ https://www.webassign.net/web/Student/Assignment-Responses/last?dep=34832472 Viewing Saved Work Revert to Last Response DETAILS MY NOTES You deposit $850 in an account paying an annual simple interest rate of 7.8%. Find the future value of the investment (in dollars) after 1 year. DETAILS MY NOTES Calculate the simple interest due (in dollars) on a 40-day loan of $1,600 if the annual interest rate is 9%. (Use 360 days in 1 year.) $ DETAILS MY NOTESarrow_forwardвсе Google Chrome - D... My Learning Progre... N Northwestern Univ... Solution Manual Fo... Business Law Question 28 of 40 View Policies Show Attempt History < Current Attempt in Progress X Your answer is incorrect. 0/0.3 Your grandfather has agreed to deposit a certain amount of money each year into an account paying 7.90 percent annually to help you go to graduate school. Starting next year, and for the following four years, he plans to deposit $2,350, $8,600, $7,200, $6,600, and $12,150 into the account. How much will you have at the end of the five years? (Round answer to 2 decimal places, e.g. 15.25.) Future value at end of five years eTextbook and Media Save for Later Using multiple attempts will impact your score. 20% score reduction after attempt 2 Q Search 41719.11 GUND Attempts: 1 of 3 used Submit Answerarrow_forwardccounting | Spring 2023 uiz Course Home - kar X K Chapter 9 Quiz OA. $18,200 OB. $18,800 OC. $17,500 O D. $20,300 mylab.pearson.com Question 5 of 10 X G At year-end, Snow 0 4 kara harper 04/09/23 10:36 AM This quiz: 10 point(s) possible This question: 1 point(s) possible ? Submit quiz Buddy Company uses the allowance method to account for uncollectible receivables. At the beginning of the year, Allowance for Bad Debts had a credit balance of $800. During the year Buddy wrote off uncollectible receivables of $2,100. Buddy recorded Bad Debts Expense of $2,800. Buddy's year-end balance in Allowance for Bad Debts is $1,500. Buddy's ending balance of Accounts Receivable is $20,300. Compute the net realizable value of Accounts Receivable at year-end.arrow_forward
- Week 6: Quiz X CengageNOWv2 | Online teachin x + Irn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSession Locator=&inprogress=false Rex and Dena are married and have two children, Michelle (age seven) and Nancy (age five). During 2021, Rex earned a salary of $26,500, received interest income of $300, and filed a joint income tax return with Dena. Dena had $0 gross income. Their earned income credit for the year is: Oa. $5,763. Ob. $0. Ⓒc. $5,980. Od. $5,700. All work saved. Previous Email Instructor Next Submit Tort for Cardi 0 8 Upcarrow_forward24arrow_forwardMy Questions | bartleby b + Camden County College References Chapter 3 Quiz Ha X //camdenccinstructure.com/courses/3788/assignments/35967?module item id=88693 Next> Send to Gradebook < Prev Submitted to Gradebook, Fri, Oct 4, 2019, 9:34:35 AM (America/New York -04:00) Question 19 -/1 View Policies Current Attempt in Progress A process with no beginning work in process, completed and transferred out 85200 units during a period and had 50100 units in the ending work in process inventory that were 20% complete. The equivalent units of production for the period for conversion costs were: O 95220 equivalent units. O 135300 equivalent units. O 70200 equivalent units. O 85200 equivalent units. eTextbook and Media Attempts: 0 of 1 used Submit Answer Save for Later 11:21 AM 10/4/2019 hp ins prt sc 12 end 11 home f10 delete fg f8 f5 f4 II & num backspace 6 5 lock } { P T U Y home + 96arrow_forward
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