Question: What is the relationship between par value,

> Let a sample space be partitioned into three mutually exclusive and exhaustive events, B1, B2, and B3. Complete the following probability table. Prior Conditional Joint Posterior Probabilities Probabilities Probabilities Probabilities P(B,) = 0.10 P

> Complete the following probability table Prior Conditional Joint Posterior Probability Probability Probability Probability Р(B) 3D 0.85 Р(A | В) 3D 0.05 P(ANB) = P(B | A) = P(B c) = P(A I BC) = 0.80 P(AN BC) = Р(вс | А) - Total : P(A) = Total = %D %

> Complete the following probability table: Prior Conditional Joint Posterior Probability Probability Probability Probability P(A) = 0.30 P(B | A) = 0.25 P(A N B) = P(A | B) = %3D P(AC) = P(B A c) = 0.80 P(ACN B) = P(AC | B) = Total = P(B) = Total =

> At four community health centers on Cape Cod, Massachusetts, 15,164 patients were asked to respond to questions designed to detect depression (The Boston Globe, June 11, 2008). The survey produced the following results. a. What is the probability that

> Let P(A) = 0.70, P (B ∣ A) = 0.55, and P (B ∣ Ac) = 0.10. Use a probability tree to calculate the following probabilities: a. P(Ac) b. P (A ∩ B) and P (Ac ∩ B) c. P(B) d. P (A ∣ B)

> Let P(B) = 0.60, P (A ∣ B) = 0.80, and P (A ∣ Bc) = 0.10. Calculate the following probabilities: a. P(Bc) b. P (A ∩ B) and P (A ∩ Bc) c. P (A) d. P (B ∣ A)

> The research team at a leading perfume company is trying to test the market for its newly introduced perfume. In particular the team wishes to look for gender and international differences in the preference for this perfume. They sample 2,500 people inte

> More and more households are struggling to pay utility bills given high heating costs (The Wall Street Journal, February 14, 2008). Particularly hard hit are households with homes heated with propane or heating oil. Many of these households are spending

> A sample space, S, yields four simple events, A, B, C, and D, such that P(A) = 0.35, P(B) = 0.10, and P(C ) = 0.25. a. Find P(D). b. Find P(Cc). c. Find P (A ∪ B).

> Merck & Co. conducted a study to test the promise of its experimental AIDS vaccine (The Boston Globe, September 22, 2007). Volunteers in the study were all free of the human immunodeficiency virus (HIV), which causes AIDS, at the start of the study,

> According to a Michigan State University researcher, Americans are becoming increasingly polarized on issues pertaining to the environment (msutoday.msu.edu, April 19, 2011). It is reported that 70% of Democrats see signs of global warming as compared to

> A poll asked 16- to 21-year-olds whether or not they are likely to serve in the U.S. military. The following joint probability table, cross-classified by gender and race, reports them proportion of those polled who responded that they are likely or very

> A report suggests that business majors spend the least amount of time on course work than all other college students (The NewYork Times, November 17, 2011). A provost of a university decides to conduct a survey where students are asked if they study hard

> According to an online survey by Harris Interactive for job site CareerBuilder.com, more than half of IT (information technology) workers say they have fallen asleep at work (InformationWeek, September 27, 2007). Sixty-four percent of government workers

> Many communities are finding it more and more difficult to fill municipal positions such as town administrators, finance directors, and treasurers. The following table shows the proportion of municipal managers by age group in the United States for the y

> Consider the following joint probability table. a. What is the probability that A occurs? b. What is the probability that B2 occurs? c. What is the probability that Ac and B4 occur? d. What is the probability that A or B3 occurs? e. Given that B2 has o

> Consider the following contingency table. a. Convert the contingency table into a joint probability table. b. What is the probability that A occurs? c. What is the probability that A and B occur? d. Given that B has occurred, what is the probability th

> A study challenges the media narrative that foreclosures are dangerously widespread (The New York Times, March 2, 2009). According to this study, 62% of all foreclosures were centered in only four states, namely, Arizona, California, Florida, and Nevada.

> According to results from the Spine Patient Outcomes Research Trial, or SPORT, surgery for a painful, common back condition resulted in significantly reduced back pain and better physical function than treatment with drugs and physical therapy (The Wall

> According to a survey by two United Nations agencies and a nongovernmental organization, two in every three women in the Indian capital of New Delhi are likely to face some form of sexual harassment in a year (BBC World News, July 9, 2010). The study als

> You roll a die with the sample space S = {1, 2, 3, 4, 5, 6}. You define A as {1, 2, 3}, B as {1, 2, 3, 5, 6}, C as {4, 6}, and D as {4, 5, 6}. Determine which of the following events are exhaustive and/or mutually exclusive. a. A and B b. A and C c. A an

> A study shows that unemployment does not impact white-collar and blue-collar workers equally (Newsweek, April 20, 2009). According to the Bureau of Labor Statistics report, while the national unemployment rate is 8.5%, it is only 4.3% for those with a co

> According to the Census’s Population Survey, the percentage of children with two parents at home is the highest for Asians and lowest for blacks (USA TODAY, February 26, 2009). It is reported that 85% of Asian, 78% of white, 70% of Hispanic, and 38% of b

> Christine Wong has asked Dave and Mike to help her move into a new apartment on Sunday morning. She has asked them both, in case one of them does not show up. From past experience, Christine knows that there is a 40% chance that Dave will not show up and

> Despite the repeated effort by the government to reform how Wall Street pays its executives, some of the nation’s biggest banks are continuing to pay out bonuses nearly as large as those in the best years before the Great Recession (The Washington Post,

> An alarming number of U.S. adults are either overweight or obese. The distinction between overweight and obese is made on the basis of body mass index (BMI), expressed as weight/height2. An adult is considered overweight if the BMI is 25 or more but less

> Apple products have become a household name in America, with 51% of all households owning at least one Apple product (CNN, March 19, 2012). In the Midwest, the likelihood of owning an Apple product is 61% for households with kids and 48% for households w

> A manufacturing firm just received a shipment of 20 assembly parts, of slightly varied sizes, from a vendor. The manager knows that there are only 15 parts in the shipment that would be suitable. He examines these parts one at a time. a. Find the probabi

> In general, shopping online is supposed to be more convenient than going to stores. However, according to a Harris Interactive poll, 87% of people have experienced problems with an online transaction (The Wall Street Journal, October 2, 2007). Forty-two

> Mike Danes has been delayed in going to the annual sales event at one of his favorite apparel stores. His friend has just texted him that there are only 20 shirts left, of which 8 are in size M, 10 in size L, and 2 in size XL. Also 9 of the shirts are wh

> An analyst estimates that the probability of default on a seven-year AA-rated bond is 0.06, while that on a seven-year A-rated bond is 0.13. The probability that they will both default is 0.04. a. What is the probability that at least one of the bonds de

> Records show that 5% of all college students are foreign students who also smoke. It is also known that 50% of all foreign college students smoke. What percent of the students at this university are foreign?

> A sample space S yields five equally likely events, A, B, C, D, and E. a. Find P(D). b. Find P(Bc). c. Find P (A ∪ C ∪ E).

> Dr. Miriam Johnson has been teaching accounting for over 20 years. From her experience, she knows that 60% of her students do homework regularly. Moreover, 95% of the students who do their homework regularly pass the course. She also knows that 85% of he

> Despite government bailouts and stimulus money, unemployment in the United States had not decreased significantly as economists had expected (U.S. News & World Report, July 2, 2010). Many analysts predicted only an 18% chance of a reduction in U.S. unemp

> The probabilities that stock A will rise in price is 0.40 and that stock B will rise in price is 0.60. Further, if stock B rises in price, the probability that stock A will also rise in price is 0.50. a. What is the probability that at least one of the s

> You apply for a position at two firms. Let event A represent the outcome of getting an offer from the first firm and event B represent the outcome of getting an offer from the second firm. a. Explain why events A and B are not exhaustive. b. Explain why

> Only 20% of students in a college ever go to their professor during office hours. Of those who go, 30% seek minor clarification and 70% seek major clarification. a. What is the probability that a student goes to the professor during her office hours for

> Survey data, based on 65,000 mobile phone subscribers, show that 44% of the subscribers use smartphones (Forbes, December 15, 2011). Moreover, 51% of smartphone users are women. a. Find the probability that a mobile phone subscriber is a woman who uses a

> Consider the following probabilities: P(A) = 0.40, P(B) = 0.50, and P (Ac ∩ Bc) = 0.24. Find: a. P (Ac ∣ Bc) b. P (Ac ∪ Bc) c. P (A ∪ B)

> Consider the following probabilities: P(Ac) = 0.30, P(B) = 0.60, and P (A ∩ Bc) = 0.24. Find: a. P (A ∣ Bc) b. P (Bc ∣ A) c. Are A and B independent events? Explain.

> Consider the following probabilities: P(A) = 0.25, P(Bc) = 0.40, and P (A ∩ B) = 0.08. Find: a. P(B) b. P (A ∣ B) c. P (B ∣ A)

> Let P(A) = 0.15, P(B) = 0.10, and P (A ∩ B) = 0.05. a. Are A and B independent events? Explain. b. Are A and B mutually exclusive events? Explain. c. What is the probability that neither A nor B takes place?

> Let P(A) = 0.65, P(B) = 0.30, and P (A ∣ B) = 0.45. a. Are A and B independent events? Explain. b. Are A and B mutually exclusive events? Explain. c. What is the probability that neither A nor B takes place?

> Express each of the probabilities in the preceding question as a. odds assessed by Sunil for obtaining tails. b. odds assessed by John for receiving straight A’s. c. odds assessed by the reporter for a Republican coming out of the room.

> Let A and B be independent events with P(A) = 0.40 and P(B) = 0.50. a. Calculate P (A ∩ B). b. Calculate P ((A ∪ B)c). c. Calculate P (A ∣ B).

> Let A and B be mutually exclusive events with P(A) = 0.25 and P(B) = 0.30. a. Calculate P (A ∩ B). b. Calculate P (A ∪ B). c. Calculate P (A ∣ B).

> Determine whether the following probabilities are best categorized as subjective, empirical, or classical probabilities. a. Before flipping a fair coin, Sunil assesses that he has a 50% chance of obtaining tails. b. At the beginning of the semester, Joh

> Define the following terms associated with preferred stock: a. Cumulative feature b. Participation c. Call feature

> Suppose a company simultaneously sold two long-term debt issues at par: 9⅛ percent senior debentures and 9⅜ percent subordinated debentures. What risk-return trade-off would be faced by an investor who was considering one of these issues?

> Describe the basic features of each of the following types of bonds: a. Mortgage bonds b. Debentures c. Subordinated debentures d. Equipment trust certificates e. Collateral trust bonds f. Income bonds

> Define the following terms associated with long-term debt: a. Indenture b. Trustee c. Call feature d. Sinking fund e. Conversion feature f. Coupon rate

> Konawalski’s Kustom Erdapfel Chips, Inc., is the maker of gourmet German-style potato chips. The company began business three years ago in rural North Carolina and grew quickly as the product became known. Konawalski is now poised for national growth. So

> Blue Moon Corporation has one million shares of common stock outstanding. In a typical annual election for the board of directors, shareholders representing 70 percent of the shares outstanding exercise their right to vote. The company has nine members o

> The following stock quotations were recently reported in The Wall Street Journal: a. What are the dividend yields on the common stock of AT&T, Boeing, and Johnson & Johnson? b. What possible explanation can you give for the differences in the

> The Alpha Tool Corporation has never paid a dividend, but the new company president has announced that the firm would pay its first dividend exactly two years from now. That dividend is expected to be $2 per share. It is anticipated that this dividend wi

> Whitehurst Associates is considering a substantial investment in the stock of Ivanhoe Enterprises. Ivanhoe currently (time 0) pays a dividend of $3 per share. This dividend is expected to grow at 15 percent per year for the next three years and 10 percen

> What effect do increasing inflation expectations have on the required returns of investors in common stock?

> Watkins, Inc., has experienced an explosion in demand for its ram football novelties. The firm currently (time 0) pays a dividend of $0.50 per share. This dividend is expected to increase to $1.00 per share one year from now. It is expected to grow at a

> The Blinkelman Corporation has just announced that it plans to introduce a new solar panel that will greatly reduce the cost of solar energy. As a result, analysts now expect the company’s earnings, currently (year 0) $1 per share to grow by 50 percent p

> Sports Novelties, Inc., has experienced an explosion in demand for its feathered football novelties. The firm currently (time 0) pays a dividend of $0.25 per share. This dividend is expected to increase to $0.75 per share one year from now. It is expecte

> The VSE Corporation currently pays no dividend because of depressed earnings. A recent change in management promises a brighter future. Investors expect VSE to pay a dividend of $1 next year (the end of year 1). This dividend is expected to increase to $

> The Cremmins Coat Company has recently completed a period of extraordinary growth, due to the popularity of its yellow jackets. Earnings per share have grown at an average compound annual rate of 15 percent, while dividends have grown at a 20 percent ann

> Excel Corporation has recently witnessed a period of depressed earnings performance. As a result, cash dividend payments have been suspended. Investors do not anticipate a resumption of dividends until two years from today, when a yearly dividend of $0.2

> The stock of Dravo Corporation currently pays a dividend (D0) at the rate of $2 per share. This dividend is expected to increase at a 9 percent annual rate for the next three years, at a 7 percent annual rate for the following two years, and then at 4 pe

> The stock of Carroll’s Bowling Equipment currently pays a dividend (D0) of $3. This dividend is expected to grow at an annual rate of 15 percent for the next three years. The dividend is expected to increase by $1 in year 4 and to grow at a constant annu

> Suppose you have accumulated a sizable investment (100,000 common shares) in Alpine Land and Development Company. You are dissatisfied with the performance of the current management and are considering running for the board of directors. The company has

> Canadian National Railway sold 10 million shares of stock to the public at $30 per share. The company received net proceeds from its underwriters of $287,506,114. What was the underwriting spread from this stock offering?

> Distinguish between unsystematic and systematic risk. Under what circumstances are investors likely to ignore the unsystematic risk characteristics of a security?

> Over the past 10 years, the dividends of Party Time Inc. have grown at an annual rate of 15 percent. The current (D0) dividend is $3 per share. This dividend is expected to grow to $3.40 next year, then grow at an annual rate of 10 percent for the follow

> Piedmont Enterprises currently pays a dividend (D0) of $1 per share. This dividend is expected to grow at a 20 percent per year rate for the next two years, after which it is expected to grow at 6 percent per year for the foreseeable future. If you requi

> Kruger Associates is considering a substantial investment in the stock of McIntyre Enterprises. McIntyre currently (time 0) pays a dividend of $1.50 per share. This dividend is expected to grow at 15 percent per year for the next three years and 10 perce

> The chairman of Heller Industries told a meeting of financial analysts that he expects the firm’s earnings and dividends to double over the next six years. The firm’s current (that is, as of year 0) earnings and dividends per share are $4 and $2, respect

> Ten years ago, Video Toys began manufacturing and selling coin-operated arcade games. Dividends are currently $1.50 per share, having grown at a 15 percent compound annual rate over the past five years. That growth rate is expected to be maintained for t

> The Seneca Maintenance Company currently (that is, as of year 0) pays a common stock dividend of $1.50 per share. Dividends are expected to grow at a rate of 11 percent per year for the next four years and then to continue growing thereafter at a rate of

> What is the current per-share value of JRM Corporation to an investor who requires a 16 percent annual rate of return, if JRM’s current per-share dividend is $2 and is expected to remain at $2 for the foreseeable future?

> Simtek currently pays a $2.50 dividend (D0) per share. Next year’s dividend is expected to be $3 per share. After next year, dividends are expected to increase at a 9 percent annual rate for three years and a 6 percent annual rate thereafter. a. What is

> Over the past five years, the dividends of the Gamma Corporation have grown from $ 0.70 per share to the current level of $1.30 per share (D0). This growth rate (computed to 1/ 10 = of 1 percent accuracy) is expected to continue for the foreseeable futur

> Cascade Mining Company expects its earnings and dividends to increase by 7 percent per year over the next 6 years and then to remain relatively constant thereafter. The firm currently (that is, as of year 0) pays a dividend of $5 per share. Determine the

> What are the primary variables that influence the risk of a portfolio of assets?

> The common stock of General Land Development Company (GLDC) is expected to pay a dividend of $1.25 next year and currently sells for $25. Assume that the firm’s future dividend payments are expected to grow at a constant rate for the foreseeable future.

> The Foreman Company’s earnings and common stock dividends have been growing at an annual rate of 6 percent over the past 10 years and are expected to continue growing at this rate for the foreseeable future. The firm currently (that is, as of year 0) pay

> General Cereal common stock dividends have been growing at an annual rate of 7 percent per year over the past 10 years. Current dividends are $1.70 per share. What is the current value of a share of this stock to an investor who requires a 12 percent rat

> How does a shelf registration differ from other public security offerings?

> Identify the major issuance costs associated with a security offering by a corporation.

> Which do you think is more risky for a firm trying to raise capital—an underwritten offering or a best-efforts offering?

> What are the differences between a direct placement, a public cash offering, and a rights offering of securities?

> What are the primary functions served by investment bankers?

> What is the difference between majority voting and cumulative voting?

> Explain how the book value per share of common stock can change over time.

> Explain how diversification can reduce the risk of a portfolio of assets to below the weighted average of the risk of the individual assets.

> Explain why the valuation models for a perpetual bond, preferred stock, and common stock with constant dividend payments (zero growth) are virtually identical.

> In the context of the constant growth dividend valuation model, explain what is meant by a. Dividend yield b. Price appreciation yield

> Explain how each of the following factors would affect the valuation of a firm’s common stock, assuming that all other factors remain constant: a. The general level of interest rates shifts upward, causing investors to require a higher rate of return on

> Explain the relationship between financial decisions and shareholders’ wealth.

> According to the general dividend valuation model, a firm that reinvests all its earnings and pays no cash dividends can still have a common stock value greater than zero. How is this possible?

> What factor or factors make the valuation of common stocks more complicated than the valuation of bonds and preferred stocks?

> Discuss the various stockholder rights.

> Explain the differences between par value, book value, and market value per share of common stock.

> Discuss the reasons why a firm may repurchase its own common stock.