Question

Consider the table given below to answer the first question (Shares and market values in millions.): x Number of Shares 71.00 Stock Price $ 6.58 Market Capitalization $ 467 $57.50 = Callaway Golf (ELY) Alaska Air Group (ALK) Estée Lauder (EL) Yum! Brands (YUM) General Electric (GE) 70.34 355.75 450.73 $65.70 $ 4,045 $ 23,373 $ 30,523 х $ 67.72 10,398.00 $23.77 $247,160 a. The price of Estée Lauder stock has risen to $85. What is the market value of the firm's equity? (Enter your answer in billions rounded to 3 decimal places.) Market value billion b. The rating agency has revised Catalytic Concept's bond rating to AAA (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 2 decimal places.) Interest rate 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? O A farmer O A meatpacker

Answer 1

Answer (a):- Market Value of Estee Lauder = (355.75 x $85) / 1000 = $30238.75 /1000 = $30.23875 Billion OR $30.239 Billion

Answer (b):- As the Table 2.2 is not provided here in the question, so the interest rate given in front of AAA rate bond  will be the answer. So, the rate corresponding to AAA bonds in Table 2.2 will be the answer.

Answer (c):- A farmer because the farmer raises them and sell it for consideration and meat packer needs beef for his business.