![subject](/tpl/images/cats/ekonomika.png)
Business, 10.12.2021 18:20 kathiewallentin1767
Genoma Inc. faces the need to raise external funds to undertake some new investment opportunities. By investing $100M Genoma will generate a gross return of $140M for sure and the market knows that. Unfortunately, Genoma has no internal funds and, because of the nature of the business, has to raise funds by issuing equity. The problem is that the market does not know whether the current value of Genoma assets is $100M or $20M, and regards both outcomes as equally likely. The managers of Genoma do know the true value, but they cannot reveal it, because this will jeopardize their success. Assume that investors are risk neutral and that the proper discount rate is zero. Suppose further that Genoma's managers are loyal agents of the existing shareholders.
a) If the market expects Genoma's managers to issue equity and undertake the investment independent of the true value of the company, what is the fraction of the final value of the company that the managers have to promise to investors to convince them to invest $100M in the company?
b) If Genoma's managers know that the true value of Genoma's existing assets is 100M would they want to issue equity?
c) What if they know that the true value of Genoma's existing assets is $20M?
d) Suppose instead that the market expects that Genoma's managers will issue equity and undertake the investment only when they know that the true value of the company is $20M. What is the fraction of the final value of the company that the managers can promise to investors to convince them to invest $100M in the company?
![ansver](/tpl/images/cats/User.png)
Answers: 3
Another question on Business
![question](/tpl/images/cats/ekonomika.png)
Business, 21.06.2019 12:30
Which of the following is an example of an unsought good? a. cameron purchases a new bike. b. jordan buys paper towels. c. taylor buys cupcakes from her favorite bakery. d. riley buys new windshield wipers for her car. d
Answers: 1
![question](/tpl/images/cats/ekonomika.png)
Business, 21.06.2019 18:30
Beta coefficients and the capital asset pricing model personal finance problem katherine wilson is wondering how much risk she must undertake to generate an acceptable return on her porfolio. the risk-free return currently is 4%. the return on the overall stock market is 14%. use the capm to calculate how high the beta coefficient of katherine's portfolio would have to be to achieve a portfolio return of 16%.
Answers: 2
![question](/tpl/images/cats/ekonomika.png)
Business, 22.06.2019 11:10
Which of the following is an example of a production quota? a. the government sets an upper limit on the quantity that each dairy farmer can produce. b. the government sets a price floor in the market for dairy products. c. the government sets a lower limit on the quantity that each dairy farmer can produce. d. the government guarantees to buy a specified quantity of dairy products from farmers.
Answers: 2
![question](/tpl/images/cats/ekonomika.png)
Business, 22.06.2019 16:00
In microeconomics, the point at which supply and demand meet is called the blank price
Answers: 3
You know the right answer?
Genoma Inc. faces the need to raise external funds to undertake some new investment opportunities. B...
Questions
![question](/tpl/images/cats/en.png)
![question](/tpl/images/cats/health.png)
![question](/tpl/images/cats/fizika.png)
![question](/tpl/images/cats/mat.png)
Mathematics, 30.11.2020 01:50
![question](/tpl/images/cats/mat.png)
![question](/tpl/images/cats/en.png)
![question](/tpl/images/cats/mat.png)
Mathematics, 30.11.2020 01:50
![question](/tpl/images/cats/mat.png)
Mathematics, 30.11.2020 01:50
![question](/tpl/images/cats/en.png)
![question](/tpl/images/cats/mat.png)
Mathematics, 30.11.2020 02:00
![question](/tpl/images/cats/mat.png)
![question](/tpl/images/cats/mat.png)
Mathematics, 30.11.2020 02:00
![question](/tpl/images/cats/mat.png)
Mathematics, 30.11.2020 02:00
![question](/tpl/images/cats/mat.png)
![question](/tpl/images/cats/mat.png)
![question](/tpl/images/cats/mat.png)
![question](/tpl/images/cats/istoriya.png)
History, 30.11.2020 02:00
![question](/tpl/images/cats/en.png)
![question](/tpl/images/cats/mat.png)
Mathematics, 30.11.2020 02:00
![question](/tpl/images/cats/mat.png)
Mathematics, 30.11.2020 02:00