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Score
:
6
/
6 100
2/3/2020 Assignment Print View
2/3
1
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:
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.
00 points
Consider the table shown below to answer the question posed in part a. Parts b and c are
independent of the given table.
Consider the table shown below to answer the question posed in part a. Parts b and c are
independent of the given table.
a. The price of Yum! Brands stock has risen to $175. What is the market value of the firm’s equity if the
number of outstanding shares does not change? (Enter your answer in billions rounded to 3
decimal places.)
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?
A farmer
b. The rating agency has revised Catalytic Concepts’ bond rating to BB (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.)
Interest rate
Market value $
Callaway Golf (ELY)
Alaska Air Group (ALK)
Yum! Brands (YUM)
Caterpillar Tractor (CAT)
Microsoft (MSFT)
5.1
58.188
%
Number of Share
(millions)×
94.6 ×
123.4 ×
332.5 ×
147.4 ×
7,705.0 ×
Number of Share×
(millions)
Stock Price
Stock Price
$16.36
$61.96
$85.13
$597.63
$91.27
=
=
=
=
=
=
=
Market
Capitalization
($ millions)
$ 1547.66
$ 7645.86
$ 28,305.73
$ 88,090.66
$ 703,235.35
Market
Capitalization
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Interest rate
Market value
Callaway Golf (ELY)
Alaska Air Group (ALK)
Yum! Brands (YUM)
Caterpillar Tractor (CAT)
Microsoft (MSFT)
$ 58.188
5.1%
94.6
123.4
332.5
147.4
7,705.0
×
×
×
×
×
$16.36
$61.96
$85.13
$597.63
$91.27
=
=
=
=
=
($ millions)
$ 1547.66 $
7645.86 $
28,305.73 $
88,090.66 $
703,235.35
a. The price of Yum! Brands stock has risen to $175. What is the market value of the firm’s equity if
the number of outstanding shares does not change? (Enter your answer in billions rounded to 3
decimal places.)
332.5 million × $175 = $58.188 billion
c.
The farmer sells cattle having raised them. The meat packer buys cattle as the input into products to
be processed and sold.
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?
A farmer
b. The rating agency has revised Catalytic Concepts’ bond rating to BB (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.)
a.
+/-0.01%
Explanation
:
