Discussion Questions on Fraud Prevention from Chapter 4 Fraud Examination 4th Edition 1. How do organizations create a culture of honesty, openness, and assistance? 2. What are different ways in which companies can eliminate opportunities for fraud? 3. What is the purpose of adopting a code of ethics throughout a company?

Q: river stock plans to pay dividends of $1.36, 1.15, $1.35, and $1.62 at the end of the next four…

A: The intrinsic value of a stock is the actual worth of a company's shares, based on its underlying…

Q: A producer of felt-tip pens has received a forecast of demand of 31,000 pens for the coming month…

A: Break-even units sold refers to the number of units that a company needs to sell in order to cover…

Q: A zero-coupon bond with a face value of $4000 and a 4.6% interest rate (compounded semiannually)…

A: Face value = $4,000Annual interest rate = 4.6%Semiannual interest rate (r) = 4.6% / 2 = 2.3% or…

Q: Problem Set 5 Chapter 11 -- Capital Budgeting Assigned Problem 2 Great Lakes Clinic has been asked…

A: NPV (Net Present Value) is a financial indicator used in investment appraisal to determine the…

Q: 6 8 49 | (22) 5:01 1 A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond…

A: The objective of this question is to find the price of the bond 6 years from now, given the current…

Q: Future value of a portfolio. Rachel and Richard want to know when their current portfolio will be…

A: A portfolio is a combination of diverse securities. It consists of constituents that have low…

Q: The most recent financial statements for Martin, Inc., are shown here: Sales Costs Income Statement…

A: The objective of the question is to calculate the external financing needed by Martin, Inc. for the…

Q: Caitlyin is saving to buy a house.She plans to deposit $12, 000into her account today and 1year from…

A: The objective of the question is to calculate the total amount of money Caitlyin will have in her…

Q: Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe…

A: The Sharpe ratio is used to determine an investment's risk-adjusted performance. It assists…

Q: A company is promising a coupon payment of $46 in 2.03 years. A risk free government bond of the…

A: The money's present value is its current worth compared to some of its potential future value after…

Q: ABC Company and XYZ Company are identical firms in all respects except for their capital structure.…

A: Investors in equity bear a portion of the business's risks and profits. Dividends and capital gains…

Q: A floating rate mortgage loan is made for $12 for a 30-year period at an initial rate of 12 percent…

A: To calculate the loan balance at the end of year 1 for a floating rate mortgage loan, we can use the…

Q: The most recent financial statements for Bradley, Inc., are shown here (assuming no income taxes):…

A: External Financing:Funds required to develop and maintain the operations of the business or a…

Q: Consider a portfolio of bonds that have an average default rate of 1%. The correlation between…

A: Worst case default rate:The term "worst case default rate" refers to the maximum rate at which…

Q: Dog Up! Franks is looking at a new sausage system with an installed cost of $725,000. This cost will…

A: Cost of system = $725,000Project's life =7 yearsScrap value = $99,000Yearly savings =…

Q: Assuming you have a margin account verage you wish to sell short a stock currently priced at $25 per…

A: Given that             Leverage  Ratio =1.76           Stock Price =$ 25 per share           Equity…

Q: You are pleased to see that you have been given a 4.55% raise this year. However, you read on the…

A: Nominal rate refers to the stated rate. Here 4.55% is the nominal rate. Now inflation causes prices…

Q: Apex Corporation is considering the purchase of Pinnacle Company in a stock-for-stock exchange.…

A: Earnings per share:"Earnings per share" (EPS) is a financial metric that measures a company's…

Q: A person purchased a $224,825 home 10 years ago by paying 15% down and signing a 30-year mortgage at…

A: House cost = $224,825Down payment = 15%Mortgage term =30 years

Q: You have just received notification that you have won the $1 million first prize in the Centennial…

A: FV= $1,000,000r=7.25%n= 80 yearsPV=?

Q: Manya and Sarah are both starting out in their careers. They choose two different paths to saving in…

A: Manya:Amount deposited = $400Current age = 23 yearsRetirement age = 70 yearsAPR = 9.5%Sarah:Amount…

Q: A 25-year, $1,000 par value bond has a 9.0% annual payment coupon. The bond currently sells for…

A: Variables in the question:Par value=$1000Annual coupon rate=9%N=25 yearCurrent market…

Q: The appropriate discount rate for the following cash flows is 15 percent compounded quarterly. Year…

A: Compound = Quarterly = 4Cash Flow for Year 1 = cf1 = $700Cash Flow for Year 2 = cf2 = $600Cash Flow…

Q: Currently, the Dow Jones Industrial Average is computed by O adding the prices of 30 large…

A: The Dow Jones Industrial Average (DJIA) is a stock market index that tracks the performance of 30…

Q: Great Lakes Packing has two bond issues outstanding. The first issue has a coupon rate of 3.58…

A: Bonds are the financial instruments issued by companies to raise funds from outside usually to…

Q: (Annuity interest rate) You've been offered a loan of $25,000, which you will have to repay in 11…

A: Present Value = pv = $25,000Number of Payment = n = 11Payment = p = $5000

Q: You invested in 800 shares of stock for $49.20 a share. The initial margin requirement is 65 percent…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: You purchased 1000 shares of IBM common stock on margin at $140 per share from your broker. If the…

A: Number of shares purchased = 1000Price per share = $140Initial margin % = 60%

Q: Required: a. How much would you expect the builder to have to give the bank to buy down the payments…

A: Present value illustrates the current value of a sum of money that will be received or paid in the…

Q: Stark Industries expects an earnings per share of $2.36 and reinvests 20% of its earnings.…

A: Given:Earnings per share (EPS) = $2.36Retention ratio (b) = 20% = 0.20Required rate of return by…

Q: Assume that you have taken out a 30-year mortgage of $240,000 and that your monthly payments are…

A: Annual interest rate refers to the percentage of return from the investment over a period of time.

Q: In order to accurately assess the capital structure of a firm, it is necessary to convert its…

A: Information in the question:Par Value =$1000Coupon rate=8.3% (payable semi-annually)N=10…

Q: Consider a stock that will have dividend growth rates in the next three periods of 13%, 9%, and 4%,…

A: We will use the dividend discount model here. As per the dividend discount model the value of a…

Q: Dividend Yield   Previous Year Current Year Net Income $35,000 $48,000 Average stockholders' equity…

A: The dividend yield is a financial ratio that measures the annual dividend income earned by an…

Q: Suppose we have the following information: Sales = $112,851 Assets = $131,468 Net profit margin…

A: Return on equity is the ratio of net income to the value of equity. Return on equity measures the…

Q: Your firm receives an offer from the supplier who provides computer chips used to manufacture cell…

A: Future value is the value of current asset at a particular date in the future when it has earned…

Q: What is the maturity value on a 6-year loan for S7, 585 if the annual simple interest rate is 6.1%?…

A: Principal = $7,585Interest rate = 6.1%Time= 6 yearsMaturity value=?

Q: 1) You are planning on buying a car and see that Toyota is advertising a promotional borrowing rate…

A: Cost of car = $24625Upfront cost if financed = $2000Time to pay the remaining amount = 2…

Q: MV Corporation has debt with market value of $98 million, common equity with a book value of $103…

A: WACC stands for weighted average cost of capital.The variables that are used in the computation of…

Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…

A: Since one underperforming item might offset the gains from a good asset, a portfolio including…

Q: Senior management of Nancy's Nooks (NN) has determined there is a 20 percent chance EPS will be…

A: The expected outcome is a measure that represents the average probability of a variable and provides…

Q: An appraiser is looking for comparable sales and finds a property that recently sold for $204,500.…

A: The objective of this question is to calculate the cash equivalent value of the property under two…

Q: Olivia's dumplings has a current stock price of $35, and pays a constant dividend of $1.05 per year,…

A: Dividend = $1.05Current stock price = $35

Q: he current exchange rate from dollars to British pounds is 1.03 ($/pound). The current dollar…

A: Current exchange rate=$1.03 ($/pound)Forward rate=$1.11Risk free rate=4%

Q: PNG se th ar ye the What is the present value of an annuity of $4,000 received at the beginning of…

A: Payment = p = $4000Time = t = 8Discount Rate = r = 9%Payment Type = at the beginning

Q: The appropriate discount rate for the following cash flows is 8 percent compounded quarterly. Year 1…

A: Interest rate compounded quarterly(r) =8%Number of compounding in a year(n) =4

Q: Your client, Albert Smith Leasing Company, is preparing a contract to lease a machine to Souvenirs…

A: An annuity is a financial product that provides a series of regular payments to an individual over a…

Q: Use the Black-Scholes formula for the following stock: Time to expiration Standard deviation…

A: Stock price$44.00Strike price$44.00Time (t) 6 months  (0.5)Risk-free rate (Rf)2.0%Standard…

Q: The Bruin Stock Fund sells Class A shares that have a front-end load of 5.05 percent, a 12b-1 fee of…

A: Mutual funds have many loads and commissions based on the type of mutual fund and type of investment…

Q: Expando, Incorporated is considering the possibility of building an additional factory that would…

A: NPV is the net present value is the difference between the present value of cash flow and initial…