Shortly after Bank One bid on the purchase of a smaller community bank, a story hit the local news about the investigation into the purchase of several thousand shares of stock of Bank One by three of its top executives, just prior to the merger announcement. Upon close examination by the SEC (Securities and Exchange Commission) it was determined that the stock purchases were an illegal maneuver on the part of these executives. This is an example of insider trading. The executives were "banking" on the stock price rising sharply when the purchase announcement was made public.**True or False**[Button: True] [Button: False]

Insider trading :- When a person makes transactions in stocks of shares just because he has any…

Answered: Shortly after Bank One bid on the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1) If you are offered the choice of receiving $10,000 today or $10,000 in one year, which option would you choose? Explain using the core principle that you have learned in class. 2) If the U.S. Securities and Exchange Commission eliminated its requirement for public companies to disclose information about their finances, what would you expect to happen to the stock prices for these companies?
Suppose the world can be described in two states, and two stocks are available with future per share prices: State X Y 1 $10 $15 2 $20 $11 The current prices for stock X and Y are $13 and $10, respectively. a) Suppose now you have saved $3900 to invest in stocks (X and Y), what is your investment strategy to maximize your total wealth when the future is in State 1? b) Based on a), what is your investment strategy if you want to keep your future wealth as smooth as possible between the two States?
2. In the game between the manager and the stockholders of Ross (1977), the future value of the firm is random and uniformly distributed on the interval [0, t], where t is the upper bound of V1. The manager knows the value of t, but the stockholders do not, and this is the asymmetry of information. In observing the debt level F chosen by the manager, the stockholders think that the value of t is given by a[F]. In the lecture on the model of Ross, it was shown that a[F] has the following form: a[F] = 4 LF+c?. Yo Compute the debt level F that maximizes the manager's expected payoff.
Which of the following statements regarding business ethics is NOT correct? According to Bagley in The Ethical Leader's Decision Tree, directors' obligation is to manage the corporation "for the best interests of the corporation", which might not be “maximizing shareholder value" all the time. According to Bagley in The Ethical Leader's Decision Tree, when there is no established ethics policy, directors can turn to their company values statement for guidance about what constitutes ethical business behavior. According to Epley and Kumar in How to Design an Ethical Organization, a better way to manage ethics is to design workplace context that encourage good behavior. Keeping prosocial values top of mind for employees as they make decisions will reduce the likelihood of transgressions. According to Epley and Kumar in How to Design an Ethical Organization, the "tone at the top" is a much more significant driver of employees' behavior than "tone in the middle".
Consider the following balance sheets of two banks. These two banks have equal amounts of assets but are leveraged differently. Assume that there is no regulatory capital requirement. Balance Sheet of Pry Bank Assets Liabilities Outstanding Loans: $300,000 Deposits (Liabilities): $270,000 Total: $300,000 Capital (Net worth): Total: $30,000 $300,000 Balance Sheet of Crow Bank Assets Liabilities Outstanding Loans: $300,000 Deposits (Liabilities): $285,000 Capital (Net worth): $15,000 Total: $300,000 Total: $300,000
FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares sell for $27 per share, the preferred shares sell for $14.50 per share, and the bonds sell for 98 percent of par. What weight should you use for preferred stock in the computation of FarCry's WACC? (Round your answer to 2 decimal places. Write your answer in percentage.)
need correct answer . absuletly upvote !!
4-23. Ethical Dilemma: American International Group (AIG) is the largest insurance company in the United States. When AIG faced financial ruin, the U.S. government used taxpayer money to loan AIG more than $170 billion in exchange for an 80 percent stake in the firm. A few months later, it was revealed that AIG had used part of the money (at least $30 billion) to pay off banks in Europe, largely for debt obligations it incurred in foreign transactions. U.S. government officials were furious. The furor intensified when AIG tried to renegotiate loans with some of its U.S. creditors, implying they were less important than the European banks. How would you handle this predicament? Use the ethical framework in this chapter to analyze how AIG might have handled the situation better.
The bank wants to sell more shares of stock, keep more of its earnings, buy more Treasury securities, and give fewer business loans. Regulators have always given it a good rating, but this financial institution thinks that by using these strategies, regulators will give it an even better rating. Explain in detail why you think the plans of the financial institution will make both regulators and shareholders happy.

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