MATH 246 Midterm: Exam 3 Solutions Spring 2003
14 Mar 2019
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Question 1. (2 points for each part; total 10 points) balance sheet analysis. At the end of 2010, duffee, inc. had a book value of equity of mm, 2mm shares outstanding with a market price of per share, cash of mm, and total debt of. Calculate the following values as of the end of 2010. Market cap is *2mm = mm: market-to-book ratio. Me/be is . 6mm/mm = 4. 222: book debt-equity ratio. Debt/be is / = 2. 7777: market debt-equity ratio. Debt/me is / = 0. 6579: enterprise value. Consider two securities that pay risk-free cash flows over the next two years and that have the current market prices shown here: Cash flow in one year cash flow in two years. 75: (6 points) what is the no-arbitrage price of a security that pays cash flows of. We need 100/25 of security 1 and 100/75 of security 2. It has an annual interest rate given by.
