What is the HHI for a market with 4 firms, each with one quarter of the market share? 1000 15000 2500 3000 Suppose there is a proposed merger between two of the firms in this market. The resulting market would be 3 firms, two with 25% of the market share and one with 50%. What would the new HHI be? 2950 3190 3700 3750 Is it likely that this merger will be challenged? yes no not enough information to tell
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What is the HHI for a market with 4 firms, each with one quarter of the market share?10001500025003000
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Suppose there is a proposed merger between two of the firms in this market. The resulting market would be 3 firms, two with 25% of the market share and one with 50%. What would the new HHI be?2950319037003750
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Is it likely that this merger will be challenged?yesnonot enough information to tell
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- One of your competitors is currently struggling financially. Their shareprice hasdropped as a result and buying them would be cheaper. Acquiring them would also beinteresting, because they cover a different geographical market.Assume that their current share price is €15 per share and they have 12 mil sharesoutstanding. They hold €40 mil in debt and have cash reserves of €1 mil. Based onthese figures, what would be the cost of buying your competitor? Assume there are noadditional fees or taxes, but the cost of taking over the company is solely determined byits value and would occur in year 0.Assume your FP&A department has forecast a target cash flow and projected growthrates as indicated in the Excel file. Use the Excel template to calculate the NPV of the investments. Assume your airline’scost of capital (discount rate) is 9%. (Tipp: Group cash flows by inflows and outflows tosimplify your calculations)The company is considering hedging its copper production. It thinks that prices are highly likely to rise in the near future, it should a buy itm puts b buy otm puts c sell otm calls d do nothingDCC exports high-speed digital switching networks, and their largest and most important clients are in Asia. A recent financial crisis in Asia has diminished the prospects of new sales to the Asian market in the near term. However, you believe that DCC is a good investment for the long term. Suppose you hold 1,000 shares of DCC and the following two options are available in the market: (a) Call A: Delta = 0.6674, Gamma = 0.0176 (b) Call B: Delta = 0.574, Gamma = 0.019 What should be the options holdings if the combined stock and options portfolio is both delta and gamma-neutral (up to two decimals)? Assume that one option contract is based on 100 units of the stock. O a. Short 73.7 contracts of Call A and long 68.27 contracts of Call B O b. Long 73.7 contracts of Call A and short 68.27 contracts of Call B Short 68.27 contracts of Call A and short 73.7 contracts of Call B O d. Long 73.7 contracts of Call A and long 68.27 contracts of Call B
- 2. During the discussion of the potential IPO and East Coast Yachts’ future, Dan states that hefeels the company should raise $60 million. However, Larissa points out that if the company needsmore cash soon, a secondary offering close to the IPO would be potentially problematic. Instead,she suggests that the company should raise $90 million in the IPO. How can we calculate theoptimal size of the IPO? What are the advantages and disadvantages of increasing the size of theIPO to $90 million?Do solve all three parts Suppose that your company wants to raise additional money via a right offering. Currently, the value of the company is $10,000,000 and the price per share is $100. The company wants to raise $1,000,000. (a) Suppose that your company wants to avoid a large drop in price after the rights offering. In particular, it wants the ex-rights price to be $95. What should be the subscription price? How many additional shares should the company issue? (b) Compute the value of the right. How many rights are required to buy one share? (c) Suppose now that the firm decides to hire an investment bank as an underwriter to facilitate the process. Suppose that the underwriter charges a 2% fee for each dollar raised in the rights offering. Redo part (a), assuming that the ex-rights price is still $95. How does your answer change if, on top of the 2% fee, the underwriter requires a fixed payment of $10,000?A successful software company is approached by two larger firms for a possible buyout. The current value of the company based on recent financial statements is $5 million. The two bids from the two larger firms are $3 million and $6 million. Both offers are bona fide real offers. What is the market value of the company? What is book value?
- Consider an industry with identical firms, each facing a demand Q = 60,000 × [1/n - 1/20 (p p)), where Q is the output level by the firm, p is the price charged by the firm and p is the average price in the industry. Suppose each firm has a fixed cost 7500 and a marginal cost 30. In the long term symmetric equilibrium, what is the value of p, the average price in the industry? (Round your answer to the nearest integer.) Your Answer: AnswerThere are two firms that are considering entering a new market, and must make their decision without knowing what the other firm has done. Unfortunately the market is only big enough to support one of the two firms. If both firms enter the market then they will each make a loss of £20 million. If only one firm enters the market, that firm will earn a profit of £80 million, and the other firm will just break even. If both firms do not enter the market, then they will just break evenas well Based on a maximin strategy, what will be the outcome? ((explain the decision step by step)There are two firms that are considering entering a new market, and must make their decision without knowing what the other firm has done. Unfortunately the market is only big enough to support one of the two firms. If both firms enter the market then they will each make a loss of £20 million. If only one firm enters the market, that firm will earn a profit of £80 million, and the other firm will just break even. If both firms do not enter the market, then they will just break even as well What outcomes, if any, are Nash equilibria? (explain the decision step by step)
- 4. GN Power is a generating company and LANECO is a retailer. These two companies are negotiating a long-term contract for the delivery of electricity and both forecast that the average spot price for the duration of the contract wil1 be 20. 00 $/MWh. If GN Power is less risk averse than LANECO, what is the price that is more likely to result from these negotiations: 21. 00 $/MWh А. В. 20. 00 $/MWh С. 19. 00 $/MWh. Both of these companies must physically trade through the WESM, but they have signed a two-way contract for difference for 100 MWh at 20. 00 $/MWh. If everything happens as planned, describe how trading is settled if the price on the WESM is 23. 00 $/MWh.You are trying to value Lucid Motors using comparables analysis. You believe Lucid Motors should be valued similarly to TSLA and that TSLA is the only reasonable comparison. TSLA is currently trading at 10.7x Enterprise Value/Revenue. Lucid is expected to generate $2.2bn in revenues this year. How mucb should you be willing to value Lucid in terms of enterprise Value (assuming market is correct)? $20.6bn $23.5bn $15.4 bn $21.7 bnBrandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $2 million, $7 million, $12 million, and $14 million. After the fourth year, free cash flow is projected to grow at a constant 5%. Brandtly's WACC is 13%, the market value of its debt and preferred stock totals $50 million, the firm has $15 million in nonoperating assets, and it has 12 million shares of common stock outstanding. a. What is the present value of the free cash flows projected during the next 4 years? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000. $ 51339694.5