FIN 515 Week 1 Assignment, Mini Case, Balik and Kiefer Inc


Category: FIN 515 Tag: fin 515


FIN 515 Week 1 Mini Case, Balik and Kiefer Inc.

Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle DellaTorre, a professional tennis player who has just come to the United States from Chile. DellaTorre is a highly rank tennis player who would like to start a company to produce and market apparel she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. DellaTorre is very bright, and she would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions you must answer to explain the U.S. financial system to DellaTorre.

  1. What are free cash flows?
  2. What is the weight average cost of capital?
  3. How do free cash flows and the weighted average cost of capital interact to determine a firm’s value?
  4. What do we call the price that a borrower must pay for debt capital? What-is the price of equity capital? What are the four most fundamental factors that affect the cost of money. Or the general level of interest rates, in the economy?
  5. What are some economic conditions (including international aspects) that affect the cost of money?
  6. Briefly explain mortgage securitization and how it contributed to the global economic crisis.

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