Question

13. Speaking at the annual shareholders' meeting of 2020, Mr. Buffett said "the world has changed" because of the coronavirus. He then said he had been wrong to invest in the airline industry. The conglomerate had an 11% stake in Delta Air Lines, 10% of American Airlines, 10% of Southwest Airlines, and 9% of United Airlines, according to its annual report and company filings. Warren Buffett says his company Berkshire Hathaway has sold all of its shares in the four largest US airlines.
Which one of the following provides the most efficient means for Mr. Warren Buffett to sell his shares?
A. Secondary market transaction
B. Proxy statement
C. Private placement transaction
D. Stakeholder purchase
E. Issuer-sponsored Dutch auction
14. Recently due to the pandemic of COVID-19, John has lost his fulltime job, but still has a part-time job. He is considering to apply for a credit card to pay his daily grocery purchases. He is studying promotion information from CitiBank as below:
“Introductory rate of 0% for 18 months from date of credit card initiation. After the introductory period ends,
the standard variable APR for purchases will be applied to unpaid introductory balances and new balance transfers. The standard variable APR for purchases is 12% to 24%, based on your creditworthiness. Purchases do not include items returned for credit, balance transfers, cash advances, interest and account fees.
Minimum interest charge – $0.50. Fee for foreign purchases – 3% of the U.S. dollar amount of each purchase. Cash advance fee – either $10 or 5% of the amount of each cash advance, whichever is greater. Balance transfer fee – either $5 or 3% of the amount of each transfer, whichever is greater.
New card members only. Subject to credit approval. Additional limitations, terms and conditions apply. You will be given further information when you apply. ”
According to the information above, what is the highest effective annual rate (EAR) John may have to pay for his credit card balance? If his credit card application can be successfully approved.
A. 12%
B. 24%
C. 12.68% D. 26.82% E. 42.58%
15. In November of 2017, Chinese e-commerce company Alibaba Group Holding Ltd. sold $7 billion in U.S.-dollar bonds, its second visit to the debt markets in three years. The company sold bonds with maturities ranging from 5.5 years to 40 years. Alibaba issued some semiannual coupon bonds at par. Comparable bonds have a current yield of 8.16 percent, an effective annual yield of 8.68 percent, and a yield to maturity of 8.50 percent. What coupon rate should Alibaba set on its bonds?
A. B. C. D. E.
         8.16percent 8.50 percent
8.55 percent 8.68 percent
9.00 percent

16. Textile Macao has sales of $923,000, cost of goods sold of $750,000, and accounts receivable of $100,000. How long on average does it take the firm's customers to pay for their purchases?
A. 9.23 days
B. 11.28 days
C. 25.01 days
D. 39.54 days
E. 45.33 days

Answer 1

13)Which one of the following provides the most efficient means for Mr. Warren Buffett to sell his shares?

Answer : A secondary market transaction.

14)what is the highest effective annual rate (EAR) John may have to pay for his credit card balance? If his credit card application can be successfully approved.

Answer :C 12.68%

15)What coupon rate should Alibaba set on its bonds?

Answer :9.00%

16)How long on average does it take the firm's customers to pay for their purchases?

Answer :9.23 days option A