Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived fro…
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Pandora Manufacturing has 5 million shares of common stock outstanding. The current share price is $84, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million and a coupon rate of 7 percent and sells for 94 percent of par. The second issue has a face value of $35 million and a coupon rate of 8 percent and sells for 107 percent of par. The first issue matures in 22 years, the second in 4 years. b. C. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) What are the company's capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) Which are more relevant, the book or market value weights? a. equity value?? debit value?? b. equity value ????? debit value??
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Transcribed Image Text:Pandora Manufacturing has 5 million shares of common stock outstanding. The current share price is $84, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million and a coupon rate of 7 percent and sells for 94 percent of par. The second issue has a face value of $35 million and a coupon rate of 8 percent and sells for 107 percent of par. The first issue matures in 22 years, the second in 4 years. b. C. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) What are the company's capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) Which are more relevant, the book or market value weights? a. equity value?? debit value?? b. equity value ????? debit value??
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