Suppose you are a Canadian resident. You are analyzing an overseas project with an initial cost of £50,000. The project is expected to return £10,000 the first year, £35,000 the second year and £40,000 the third year. The current spot rate is £0.5086 per C$. The nominal return relevant to the project is 11 percent in Canada. The nominal risk-free rate in Canada is 3.0 percent while it is 5.0 percent in the U.K. Assume that uncovered interest rate parity holds. What is the (approximate) net present value (NPV) of this project in Canadian dollars?

Firm X is planning on merging with Firm Y. Both firms are currently 100% equity-financed. Firm X will pay Firm Y's stockholders the current value of their stock in shares of Firm X. Firm X currently has 3,900 shares outstanding at a market price of $40 a share. Firm Y currently has 2,200 shares outstanding at a price of $17 a share. If the after-merger total earnings are $7,800, what will be the earnings per share (EPS) after the merger?

Which of the following is the best definition of the clientele effect?

A ticket to a baseball game gives the holder the right, but not the obligation, to attend a specified game. Thus, loosely speaking, a baseball ticket is effectively a(n) __________ option on the possession of a seat, which has an expiration date equal to _________ :

All else equal, a stock dividend will _____ the number of shares outstanding and _____ the value per share.

Rocky Ground Camping Supply Inc. is an all-equity firm, with 200,000 shares of stock outstanding each trading at a market value of $15. In addition, on the balance sheet there is common stock of $1,950,000 and retained earnings of $1,450,000. Suppose the firm declares a 20% stock dividend. What is the stock's new price per share? Assume there are no taxes or transaction costs.

Which one of the following is most likely a good candidate for an acquisition that could benefit from the use of complementary resources?

Which of the following represents selling a put option?

Firm A is being acquired by Firm B for $38,000 worth of Firm B stock. The anticipated synergy value of the deal is $7,400. Both firms are currently 100% equity-financed. Firm A has 2,500 shares of stock outstanding at a price of $22 a share, and Firm B has 7,400 shares of stock outstanding at a price of $48 a share. What is the price per share after the acquisition?

Suppose you are a U.S. resident. You are expecting a payment of C$60,000 three years from now. The risk-free rate of return is 4.3 percent in the U.S. and 4.8 percent in Canada. The inflation rate is 3.7 percent in the U.S. and 4.1 percent in Canada. Suppose the current exchange rate is C$1 = $0.9489. If uncovered interest parity holds, how much (approximately) will the payment in three years be worth in U.S. dollars?