You forecast a company will generate $250 million of free cash flow to the firm (FCFF) next year, grow at 5% per year for the following 2 years, and then slow to a long-run, steady state growth rate of 2% thereafter. You estimate a 10% weighted average cost of capital (WACC) and a 12.5% cost of equity. If the company owes $1.0 billion of debt, what is the estimated value of the firm’s total equity?

You buy 50 shares of stock on margin for $500 per share, and post an initial margin of 50%. If the stock rises by 22% over the course of the year and you are charged 9% on the amount you borrowed, what is your rate of return on the trade? (the stock does not pay dividends)

Suppose you buy 100 shares of Apple at $225 per share by posting an initial margin percentage of 50%. If your maintenance margin is 25%, what price per share would trigger a margin call from your lender?

Which of the following is not a characteristic of short selling?

Which option strategy would be best for someone who wants to limit both the upside and downside risk of a position?

Which of the following is true regarding margin trading?

An insurance company has an average duration of liabilities of 3 years. The company plans to fund these liabilities by investing in zero-coupon bonds that mature in 2 years and 5 years. How much of its portfolio should it allocate to the 2-year zero-coupon bonds to immunize if there are no other assets funding the plan?

The free cash flow to the firm is reported as $335 million. The interest expense to the firm is $55 million. If the tax rate is 20%, and the net debt of the firm reduced debt by $75 million, what is the free cash flow to equity holders of the firm?

Financial institutions can immunize their portfolios by

Standardization and validation of wearables measuring cardiovascular data is not needed since it is technology that has been well established.