BUSI 530
CHAPTER 2 HOMEWORK -CONNECT
HOMEWORK-Financial Markets Assignment
a.
(Enter your answer in billions rounded to 3 decimal
places.)
6out of/6
Total points awarded
The price of Yum! Brands stock has risen to $160. What is the market
value of the firm’s equity if the number of outstanding shares does not
change?
b. The rating agency has revised Catalytic Concepts’ bond rating to AA
(use Table 2.2). What interest rate, approximately, would the company now
need to pay on its bonds? (Enter your answer as a percent
rounded to 1 decimal place.)
1.Consider the table shown below to answer the question posed in part a.
Parts b and c are independent of the given table.
Callaway Golf (ELY)
Alaska Air Group
(ALK)
Yum! Brands (YUM)
Caterpillar Tractor
(CAT)
Microsoft (MSFT)
Number ofMarket
Share Stock Capitalization
(millions)× Price= ($ millions)
94.6 × $16.36 = $1547.66
123.4 × $61.96 = $7645.86
332.5 × $85.13 = $28,305.73
147.4 × $597.63 = $88,090.66
7,705.0 × $91.27 = $703,235.35
Market
value
Interest
rate
$53.200selected answer
correct
3.5selected answer %
correct
c. A farmer and a meatpacker use the commodity markets to reduce their risk.
One agrees to buy live cattle in the future at a fixed price, and the other
agrees to sell. Which one sells?
multiple choice
A farmer Correct
A meatpacker
Explanation
a.
332.5 million × $160 = $53.200 billion
c.
The farmer sells cattle having raised them. The meat packer buys cattle as the input into products to
be processed and sold.
