Acorporation has issued 10%, $1,000 par convertible debentures, convertible at $40. the common stock is currently trading at $45. if the bond and the common are trading at parity, a customer purchasing 5m of the bonds will pay: a $4,950 b $5,000 c $5,625 d $6,550

Why is efficiency an important economic goal?

Gulliver travel agencies thinks interest rates in europe are low. the firm borrows euros at 5 percent for one year. during this time period the dollar falls 11 percent against the euro. what is the effective interest rate on the loan for one year? (consider the 11 percent fall in the value of the dollar as well as the interest payment.)

Brandt enterprises is considering a new project that has a cost of $1,000,000, and the cfo set up the following simple decision tree to show its three most likely scenarios. the firm could arrange with its work force and suppliers to cease operations at the end of year 1 should it choose to do so, but to obtain this abandonment option, it would have to make a payment to those parties. how much is the option to abandon worth to the firm?