A Letter to Morrie Shwartz

It really started to dawn on me how lightly we take the season we take for in our lives and how little we love and live to the fullest. I face that your belief in when we learn how to die, we learn how to live was really enlighten and true. As I read your philosophies on death and aging, you really set forth aging as not nearthing to be hated and feared, scarce something to be embraced. You thought of it as more knowledge and experience, and had no reason to be jealous of young people why be jealous of a man who is 40 when youve already been there?This idea really changed my thoughts on aging. Another belief of yours that admired was the bird perched on your shoulder. Though it wasnt your philosophy, it changed me a stilt to approximate harder in life. I ask myself each twenty-four hours whether or not would be satisfied with dying at the oddity of the day. From this idea, thought of each time I sleep as me dying, but being reborn in the morning and starting the day anew. However, some geezerhood Im just really unsatisfied, and thats okay, but will always try my best to bring a great day every day.When you had unity of your early conversations catching up with Mitch after so many years, I found your outlook on peoples everyday lives to be very true. In the past few months, found myself very unsatisfied with how I was doing in school and keeping my body active. I had many unsatisfied days and nights, falling asleep unsure and anxious. During the day, I try my best to be alive and in the moment, and really being there, having my presence in the agency in front of my peers. This idea really changed my thoughts on everyday fife and experiencing it fully.Yet some other philosophy of yours that really moved me was your detachment technique. Recently, Ive taken a lot of blows to my pride, and have lost a lot of respect from others and myself. I just have a lot of self-pity. Some days, when I feel incredibly meritless and cooperateless, I detach mysel f experience, wash myself in all the negative emotions bothering me. sheath these problems and emotions so that I can understand it, know it, and then permit go. It really helps when I feel pretty low, and Im sure it will help even more n the future, and appreciative for that, Morris. Next pig) All in all, my idea Of the meaning Of life has changed so much. I have erudite to live more, love more, and do more. It has changed me as a person, and really could neer have had such a great learning experience. Ive learned a lot about myself and the people around me flaws, talents, interests, opinions, beliefs, the list goes on. A lot of the problems Ive had have been solved thanks to your story, Morris. I am sincerely thankful for that, and your student Mitch, for sharing it with us. Sincerely yours,

Response Essays Essay

Response to Foul Shots In Foul Shots, Rogelio R. Gomez writes nearly his Chicano dry land and the neighborhood he grew up in. Furthermore, he describes himself being stereotyped as one of the barrio boys basically meaning that he is considered inferior to the Anglos. In full(prenominal) school, the writer states that he was on a basketball team and that in that respect was one day when his coach announced that his team was to buddy up with the opposite team. The opposite team was all White and therefore had a big conflict with the barrio boys due to racism. one and only(a) of the Anglos threw a bag of Fritos to the barrio boys as an insult because of the Frito Bandito commercial which was, at its time, very popular and involved a stereotyped Mexican bandit from the Western movies who would steal Fritos. Gomez states in his analyse that this insult still persists in his mind after more than 20 years prolong come ab verbotened because he still wonders what he should have throu gh with(p) in the situation and always comes to a though in where he is crushing a silly bag of Fritos.The title seems to go advantageously with the whole theme of this essay and has two meanings on being that since they are on a basketball team and a foul in basketball is an illegal move and also using the meaning of the rule book foul as unfair they are being compared in a sense. The Anglos in the essay are very unimaginative due to the item that they threw a bag of Fritos at the barrio boys and treated them very rudely they basically musical theme of them as inferior as stated in by the author.Something that can also be said in this situation however, is that the stereotypical thoughts could be turned towards the Anglos implying that the Mexican-Americans discriminate towards them too. The reason why is because, in the essay, it says that the barrio boys act to act like they were superior because of their toughness and how they played basketball more than better than the Anglos, beating them at every game. This whole problem could have probably been prevented if the coaches took a different approach towards the conflicts between the two teams. sort of than having the two teams get together, which obviously magnified the problem, the coach should have talked to the students about the different ethnic backgrounds and how to deal with racism and stereotypes. Response to The Happiest Day of My carriage In the essay, The Happiest Day of My Life, a man by the name of Michael T. metalworker worked in an office with large windows that were facing a busy overpass. One day, smith decided to start waving at the people that would pass by. metalworker started these window antics to bring joy and relieve the stress during work.Smith kept on waving to these people to the point where it became a day-by-day routine. Eventually, his co-workers began to notice this and share the laughs he would get from waving at these people. somewhat Christmas time, it began to get stressful because of all of the job cuts and to help cheer everyone up, Smith decided to dress up as Santa Claus during work. When his supervisor found out about this, he called Smith into his office which made Smith get under ones skin very nervous, especially during this time, exclusively to his surprise, his supervisor couldnt help but laugh and thanked him for what he had done to cheer everyone up.I personally thought that Smith was going to get warned not to do something like this once again or he would lose his job because of the reaction given in which it says that his supervisor turned and left. After a while, Smith began to see a bond growing between the people he would wave to, especially the bus riders, but didnt realize how strong it was until the day when his daughter was born and they held up a sign saying congratulations

Development of the Ancient Roman Navy Essay

Naval warfare was considered a atomic spot 42 thought to most ancient Ro humanitys. It never carried the same prestige as that of a legionary. Before the front punic War the roman letters nautical forces consisted mainly of allied ships and a few Roman ships that had crews that were very inexperienced. When move into the frontmost Punic War they realized they needed to develop a naval forces to match the superior Carthaginian fleet. The fleet that the Romans had before the war would never withstand whatever naval skirmishs.In building their dark blue, the Romans were fitting to utilize their resources, their allies resources, as well as virtually smartness to help overcome their naval weaknesses and lacing the Carthaginians in the prototypical Punic War. The Romans lost many fleets and sailors throughout the course of the war merely their perseveration and determination ultimately helped them prevail. In the beginning, Rome founded colonies to provide playgroun d slideal demurrer as opposed a naval force to police the shores of the ring territories. They used the warships and crews from naval allies, freedwork force, and marines from lowest class eligible for armed services service.Romans predominate the sea by gaining possession of the land. Given the limited range of ships, this was an in force(p) strategy. Ships were only constructed as a last solution to a military problem. As soon as a achievement was achieved, the ships were left to recoil and the naval needs were met by relying on allies. It was Romes winner on land that do such indifference much or less naval battles. However, if there was ever a need for naval battle, their small navy could never withstand such a task. at that place was very stripped-down naval conflict between Rome and its enemies leading up to the set move out Punic War.Once the Punic War began they k sore the only shot they had to defeat Carthage was to create a navy that would rival that of the mig hty Carthaginians. In point to rival Carthages navy, they would need a design for their ships, a bearing to build them and people to man them. The ships were build based on a sunken Carthaginian quinquereme mop up the west coast of Sicily. The Romans then set out to build one hundred quinqueremes and cardinal smaller ships such as triremes (Sage 285). Quinqueremes were the heaviest ship of the time.They had three banks of oars and 180 oars. thither were ii people on the upper oar and one on the disappoint oar. The trireme had 170 oars, there were three banks of oars and there was one rower per oar (Mitchell). They were open to gather the necessary resources from Rome and get the ships built or strike from naval allies. The crews were assembled from naval allies, freedmen and marines from the lowest class eligible for military service. The navy was never held in the same esteem as legionaries so they never got the same quality of recruits.This ability to utilize their resour ces was key in part in creating the future of the Roman navy. The Romans lack of any skill on the sea should have woo them the naval battles of the First Punic War but that was not the case. The Romans invented a device to basically create land battles on the sea. This device was called a corvus or the raven. Polybiuss description of the corvus and how it was used is as follows a weighty pole stood on the prow of the ship sixteen feet high and about one foot in diameter.It had a pulley on its pourboire and around it was placed a embarkation bridge made of go across planks nailed together which was four feet wide and twenty four feet long. There was an oblong hole in the bridge, which was placed around the pole twelve feet from its remainder. There was a knee-high railing on each side of the boarding bridge and at its end was fastened an iron object shape like a pestle pointed at one end with a ring at the other end so that the whole weapon looked like a device for grindin g grain (Polybius)The corvus turn out vital during the First Punic War, especially at the Battle of Mylae.It would be swung around and brought down hard on an enemy ship. Then the soldiery would charge over the plank dickens by two. The first two men protected the rest by raising their shields. The men groundwork would place their shields over the railing and protect from the sides. The Romans captured the first thirty two ships that attacked them. The rest of the Carthaginians then approached and saw the devastation that the corvus had done. They turn to sieve and attack the sides or stern of the Roman ships but the corvus was adequate to turn and attack from different angles.After seeing this, the Carthaginians fled in tending after what had happened and after losing fifty ships (Polybius). The Romans won a decisive victory through the use of the corvus and made their presence known on the Mediterranean. The Romans ingenuity through creating the corvus is very clear and hel ped through the advance(prenominal) development of the Roman navy. Though the corvus has many positive features, some of its negative features were starting to come about as the Romans started to sail more than and farther. The corvus was placed at the bow of the ship so it made the vessel unstable during rough weather.As a result, most of the casualties of the First Punic War were at the hands of Mother Nature as opposed to the Carthaginians. This, and the Romans inexperience at sea cost them heavily as they lost 284 ships in a storm off the outer coast of Sicily. They had lost a lot of ships and only had 80 remaining at the time (Tarn 53). However, Romes success came from its superior manpower resources which allowed it to man new fleets despite these sever losses. To prove the Romans determination, they built a fleet of 200 ships. This did not go without disaster either. some other storm cost the Romans 150 brand new shipsin 253 BC off the Lucacnian coast and subsequently the R omans lost their only major(ip) naval defeat of the war in 249 BC when a bewilderment attack failed at Drepana. Thirty Roman ships were able to escape but 93were captured (Tarn 54). The Romans appeared to have given up on their naval efforts. It looked as though Carthage ruled the sea erstwhile again. No ships were being built and the Romans were adhesive to the land the tactics that they knew best. However most of the Romans naval losses can be attributed to bad luck and inexperience on the sea.By 242 the Carthaginian General, Hamilcar Barca, had enjoyed success in Sicily and by now the Romans snarl the war had dragged on for too long. They were determined to return to the sea and break the Carthaginians once and for all. There was one problem though. The Roman treasury was exonerate and they had no property to spend on building another fleet. The judicature then turned to the wealthy citizens of Rome and begged for money to build a new fleet. The wealthy agreed in a sign of nationalism and they went ahead and successfully financed construction on a fleet to end the war (Rickard).This shows the Romans determination, persistence and ability to utilize the wealth of Rome. The Romans felt they didnt need to repeat what had happened with the corvus again so they omitted it from their new ship designs. This resulted in the Roman ships being much lighter and much more manoeuvrable then the Carthaginian ships. The Romans met the Carthaginians in 241 BC where they cut them off at the Battle of the Aegates Islands. The Carthaginians ships had very inexperienced crews as they were newly enlisted men who had just signed up for this battle.They couldnt handle the heavy and inept Carthaginian ships with their lack of skills and experience. Similar to the way the Romans were before the beginning of the First Punic War. The Carthaginians were commanded by Hanno and the Romans were commanded by Catulus. The fighting was predictably one sided as the Romans captured 7 0 ships and sunk 50 ships. Hanno was subsequently executed for his failure in this battle. After the Battle of the Aegates Islands, Hamilcar was allowed to negotiate terms of surrender. The terms included money to pay for the newly constructed fleet and no Punic war ships were allowed in Italian waters (Rickard).The Romans were victorious and the Punic War came to a close. by means of fierce determination to rebuild the Roman Navy in 242 BC and their ability to adapt their ships to the new circumstances led to a Roman victory and a sinewy development of the Roman Navy. The development and overhaul of the Roman navy during the First Punic War shows a number of qualities that were key to Roman domination in the next centuries. Their adaptability and ability to reap a strategic assessment of the Carthage navy and how to overcome it was very Copernican in leading to a victory in the First Punic War.Through their determination and persistence they were able to learn from their mista kes and overcome what had cost them their early losses. It was the Romans ability to utilize available resources to reconstruct their destroyed navy. They likewise came up with a creative solution to a problem of struggle ships to help benefit their strengths of hand to hand combat. This was a very strong development of the Roman navy and led to their stranglehold on the Mediterranean for the majority of the next centuries. In fact, during the Second Punic War, Hannibal abandoned his once powerful Carthage fleet to focus on conquering by land.The victories in the sea bred confidence in the Roman navy. They were able to bring the battle directly to the Carthaginians and take it out of Italy. With the final destruction of Carthage and the end of the third gear Punic War, Rome was the master of the Mediterranean. This as a result reduced any threat of a naval power and the navy had reached its tiptop (Gabriel). In conclusion, the First Punic War was the spark that set off the Romans to put a lot of time, resources and manpower into developing and redeveloping their navy to bend the super power that it was.

Discussing Hamlet Essay

At various times, Shakespeare has been disciplinen by critics as presenting sm all in all town as a sensitive poet, unable to travel the cruel pressures of the world, a globe driven by sexual desire for his mformer(a), and a representative to a corrupt political regime. Which would be your interpretation and why? The geek of small town can simply be described as he who embodies all that man represents in earth- as Toril Moi so eloquently points out. My interpretation, uniform Torils, is that simplicity is an element that lacks in tremendous proportions in juncture he is a complex and three-dimensional character to an infinite extent.So much so, his complexity allows him to assume an antic-disposition and also appear truly insane at the same time. It is apparent(a) that Shakespeare adopted the Senecan classical revenge catastrophe style of plot, which clearly sets out the characteristics of hamlet As the son of the deathlike king/ tiro, it was obligatory to avenge his fa thers death, thus far prevent this act is the heros hesitation, which one could describe as settlements cowardice. Eventually, Hamlet killing Claudius fulfils the revenge tragedy. Hamlet is therefore a revenge tragedy in plot, tho not in telephone exchange character.In my prospect, it is more intriguing to use the vengeance theme as a carrier to picture the unimaginable depth of emotion contained in Hamlet. This emotion is caused by human experience of dealing with death, pursuing revenge, inaction, action, trial in love, and finally the oppressive affect on man (Hamlet) by a nation of corrupt power. Hamlet is a dexterous courtier and scholar, even so in times of extreme pressure he averts from his calm-courtier ways and behaves erratically, leading to fatal ends, such as the unnecessary killing of Polonius.The genuine despair of Hamlet limits his capacity for action and increases his self-abasement and self-disgust, constantly questioning the foster and purpose of his l ife- hence being unable to endure the cruel pressures of the world. Hamlet thinks too precisely under the weight of thought, which as he says himself makes cowards of us all- This hesitation eventually leads to the downfall of Hamlet I would define the sensitivity in Hamlet as a deep philosophical nature wherein is contained a boundless range of emotion, which is depicted more so in the seven soliloquies in the play.We see Hamlets basic soliloquy in act 1, scene 2, and expect to see a true sensitivity of Hamlet, as Shakespeare intended soliloquies to reveal a characters true feelings, void of lies and deception. The opening lines of the soliloquy immediately preface poetic antithesis O, that this too sullied flesh would melt, Thaw and resolve itself into a dew. It is evident here that Hamlet is plagued with melancholy, wanting his solid pain to dissolve, in other words he is suicidal. This suicidal behaviour implies that he is unable to endure the cruel pressures of the world, as he welcomes death to terminate all his problems.The priming coat he gives for not committing suicide is religious, that God condemned it in his sixth commandment, however he wishes that the Everlasting had not fixd His Canon gainst self-slaughter . many critics say that he used religion here to serve as an excuse for avoiding the action of self-slaughter, however I believe in Hamlets belief and faith in religion, as he swears upon the vocabulary of the church, Hic et Ubique when promising his purpose to his fathers ghost, which I believe Hamlet would have taken very seriously. The bleak, grim words of the soliloquy, such as staleUnprofitable express of his depression and distaste of life. Hamlet in my opinion is also very unhappy with the state of Denmark, metaphorically representing it as an unweeded garden, that is a diseased and corrupted pit rank and earn. After the internal insight of depression and woe in Hamlet, we see the reason behind his piteous state- that cannot be due to Claudius killing his father because he doesnt yet know that It is in equal broadside the death of his beloved father, and the revulsion of Claudius and Gertrudes hasty marriage into incestuous sheets.Hamlet absolutely abhors Claudius, describing him as a bloat-king and a Satyr- simply a beast in modern terms, which is in contrast to the wide admiration for his deceased father, the Hyperion- the beautiful sun God. The fact that Hamlets true father was a hyperion, that he was so loving to my draw and that she would hang onto him with great happiness, implies that Hamlet nonsuchised his parents marriage. However, the betrayal of his mother to the ideal of marriage at an insincere instant, unrighteous tears at an O most wicked speed, badly bruised Hamlets opinion of women, degrading their honour and purity.The poet Hamlet uses personification to express his disgust to womankind in general Frailty thy name is woman . This disgust in women is what I believe caused Hamlets bitte r rejection for Ophelia, not because Hamlet is insensitive, but because his fragile sensitivity was taken advantage of and bruised. Hamlet later continues to express his disgust in women by using similes referring to women in a disconfirming way to describe a bad situation Like a Whore unpacked

Are Reason and Emotion Equally Necessary in Justifying Moral Decisions Essay

Emotion is a strong feeling, desires or passion. It is palpable and operative. The feeling is mostly caused by consequences of questions past conclusions and beliefs of the people. Also, it is sometimes incomprehensible because their ideas be non largely sub-conscious, but also inconsistent (Skysite). Men support accept ideas without knowing if it is right or wrong and this may suggestion to thought or feeling without even aware of what is legitimately happening. The circumstance is not discover and accepted only in our minds. Furthermore, it is a receipt in ones perception. It has no observation.What comes in our minds can any be true or false. Once a slice acquires experience, it automatic entirelyy keeps on the minds without even aware or no facts are observe. The forge of learning, judging and implying are applied continuously. The fight backion of the acquired knowledge is the emotion (Skysite). A reality has a trusted feeling or emotion is because of the for mer knowledge that the man acquires which is stored in his subconscious mind. It reviews that the acquired ideas take up support and ideas motive to be validated for confirmation to make it valid or bankable (Skysite). Reason is awareness.The data is studied, observed and organized. You are directly guided with an observed data. The organized and observed data is relevant and truth. The man is obliged to conceive the fact (Skysite). Emotions are reactions of mans ideas. He accepts ideas through mind and may think of ways of improving those ideas and think of reality itself. So, the outgrowth of debate is therefore should be identified by removeing those ideas to be able to meet the reality which is the fence. Reason is to recognize the reality, or the real meaning of life, the people, the country and the world.Based on our own recognition of the world, we react through our emotions. It is generally moot to rely on passion follow power. The reason is know as slave of passi on. We follow our beliefs. Our reaction is ground on our thinking because we believe on it (Machan). One example is mercy killing. Euthanasia is the practice of having a medically-assisted death or mercy-killing. In some countries, it is illegal. It is a debatable subject among different moral quandaries related to it (Wikipedia). Euthanasia is conducted with certain criteria to tip over. It is not simply killing the person automatically. It is done with accede.It can both be voluntary or involuntary which means with consent or without consent respectively (Wikipedia). If a man believes in the words of staring(a)ion or the story of the Bible which is known to be the Holy have of some religion, the emotion of the man is unhappy or afraid because probably, he doesnt pit to Euthanasia because in the Bible Euthanasia is not acceptable. Man is afraid of practicing Euthanasia because he believes in the Bible. If we think of a reason, the man believes in what the Bible says and b elieves everything impart be alright if we believe in Gods words that are written in the Holy Book of the Christians.However, if a man is suffice with the whole study of Euthanasia and he believes in Euthanasia because if a man is anxious(p) and cant delay any longer, it is therefore get his consent to apply Euthanasia for a reason. To prevent him from feeling the pain longer, he believes that Euthanasia is said to apply. Euthanasia is accepted in the mans mind which is generally leads to emotions, but the reality itself and the reason behind the puzzle out of Euthanasia is because the man is dying and he cant stay longer, it is better to cut his life earlier than feeling the pain longer.Because of the observed data which is the reason behind the practice of Euthanasia to man, the mercy-killing is acceptable to the mans sub-consciousness. If a man is dying and cant live any longer, the man accepts voluntary euthanasia rather than a fiscal burden to his family. In this regard, emotion followed by a reason. The emotion to consider is he feels bad because he knows that his family will bound to financial problems which is the reason for accepting euthanasia. Another example is the abortion. Some countries dont agree with abortion because it is a murder. Any live person that you intentionally killed is known as murder.Some believe in abortion. It is applied and required for a certain reason. Probably, the mother is experiencing certain ailments or sickness that needs beneficial treatments like drinking medicines that are not good for the infant privileged the uterus, the child should be aborted because if not, the child will unluckily live an deviate life because of his abnormal behavior. Unfortunately, if the child will be aborted, the mother will feel bad, but if the child will be aborted for a reason you will somehow feel less disappointed because youll know for a reason that the child will either become abnormal or die young.The reason behind the abort ion of the child inside the womb is to save the child for sufferings for life. In the contrary, if we dont agree in abortion because of our belief, our reason here is not to abort the child for the reason of the belief itself. For instance, the man recognizes that he doesnt believe in abortion. The response of that belief is known to be our emotion. The reason now follows. Because the man doesnt believe in abortion because of his faith, it is known to be the reason for not believing on it. The infant inside should be aborted and wait for his approach path to the world of people.Further example is the divorce. Some countries, divorce is acceptable, but in some are not. This divorce really depends on our own belief. We all know that in the higher level of Christian church, divorce is not really acceptable to them because, they believe that if you are both blessed to be together for life, you should be together for good or worse. If a man believes, your emotions will be the response o f what you think. For instance, your emotion is to love and respect the person you are with. The reason is to take care of the relationship for life.Emotions and reasons are perfect harmony which means that they are compatible with the opinion and action. People need both emotion and reason in order to make end according to neuroscientists. It is really complicated when it comes to the reasoning, but the most important for me is how you apply it by means of your own beliefs. It is important to broaden up you knowledge to come up with the best part which is the decision making process. It is important and important because with your decision, you will bring happiness and contentment in your life.

An epidemic of inhalation anthrax: the first in the twentieth century Essay

Bioterrorism is threatened call of biologic agents touching group, a person, or larger populace to wee illnesses or fear for purposes of threats, interruption of normal activities, gaining an advantage or ideologic objectives. The consequential reaction is dependent leading the actual occurrence and the creation caught up and toilette vary from a minimal endpoint to prisonbreak of continuing activities and illness, emotional reaction, or death. The anthrax eruption in the US which happed during the last part of 2001 this had characteristics of a typical forthbreak.A terrorist strike by the use of a biological weapon to civilians depart entail answers that originally differ from the counter demanded by a hit that uses explosives as comfortably as nuclear explosives or chemical weapons. The public health and medical reaction to a bioterrorist hit determination also differ considerably from reaction to ordinary disasters. Construction of efficient response programs entail th at these distinctions be evidently recognized. The result of a bioterrorist strike on inhabitant would crouch out to an epidemic (Brachman H, et al. 1960). A bioterrorist dishonour on civilian whitethorn possibly have several results, ranging from low-grade signs confined to a topical anesthetic region and not instantly recognized as an effect of biological weapons employ, to an extensive epidemic. The first responders would be nurses, public health professionals, and physicians in topical anaesthetic health departments. A covert bioterrorist strike could probable come to remark increasingly, as doctors turn out to be conscious of an accumulation of somber deaths among healthy citizens. The accuracy and speed with which laboratories and physicians reached right identify and reported their result to public health authorities would openly change the number of deaths, and if the attack use a infectious disease the capacity to embrace the epidemic.The major(ip) areas concerned i n reacting to a bioterrorist occurrence include planning, detection, diagnosis, investigation, treatment, communications, and training (Brachman ,at el 1998). In the planning stage, attention moldiness be set to jam cooperation among the multiple links that have tasks for implementing the procedures. The partners at local levels, and the federal, state must(prenominal)iness assist in developing the tactics and also in carrying out the tasks. The main purpose must be to carry on the quantisation of the occurrence to a minimum. Administrators must offer management proficiency that creates the milieu in which at hand posterior be successful acquirement of the objectives (Friedland A, et al. 1993). Additional professions include communication and public relations specialists, laboratories personnel, epidemiologists, surveillance personnel, heath care personnel, environmentalists, behavior scientists, and support personnel. Resources, such as sufficient and antiphonary laboratory supplies and facilities access to computers and other kinds of transportation, communication, and finances must be obtainable.In response plan of detection public health surveillance which place be either passive or active moreover must be sensitive and specific. The basic, regular, passive public health inspection carcass in place throughout is the first stage of detection system. It crash necessary to develop case description for the reporting of syndrome of concern in the bioterrorist reaction system. The area of biological terrorism reaction is that of diagnosis (Meselson et al. 1994). It is obvious from the new-made anthrax bioterrorism occurrence that health care expert must be educated concerning diseases to which they not have been exposed in their fosterage given that rarity or nonexistence of the diseases.Investigations should be started at the local level with fast and ready support from federal and state agencies. there requirements of clarification from the start about who has the accountability for conducting and directing the investigations, as a bioterrorist event will bring into the investigative ground more than but the public health agency. There requirements of a rapid evaluation of the to the highest degree favored method of treatment via the most reasonable and up-to-date friendship to stop death, control the increase of disease, and stop additional cases. Suggestion should be efficient as new information is available. There must be agreement about the items in the stockpile and clear procedures about how necessities can be made for release of the items.Communication is the main feature of the bioterrorism response preparation not only for prevention and control consort but to temper the frenzy and fear that results from bioterroristic measures. One cannot eliminate hysteria and fear, but education and communication can help change it and restrict its effect on the people. Public relations personnel are so-called to be given the accountability for release and preparation of this information, designed for a well-informed and single source. The final, aspect of the bioterroristic response is training all categories of concerned personnel must be skilled concerning their own tasks. This can be achieved through educational programs, Internet material, and written materials (Schaffner and LaForce 1996). Tabletop training, that is, field trials of the reaction plan, can be extremely effective not simply in educating the responders but in recognizing the deficiencies in the procedures.In conclusion, if a bioterrorist attack takes place, the resulting response will employ all levels most of federal agencies, several professional communities and government, for the most part public health professionals and health care provider. Bioterrorist attack takes place in an environment of, uncertainty, fear and great tension. Resolution will have to be coordinated and made very fast. Implementation and planning of effe ctive response tactics must take into consideration the complexity of this challenge and the inter-institutional nature, innate multidisciplinary of the crisis.ReferencesBrachman PS, Kaufmann AF. Anthrax. In Evans AS, Brachman PS, eds. (1998).Bacterial infections of humans. New York, NY Plenum Medical Book Co,95107.Brachman PS, Plotkin SA, Bumford FH, et al. (1960). An epidemic of stirring anthrax the first in the twentieth century. II. Epidemiology. Am J Hyg 196072623.Brachman, PS, Gold H, Plotkin SA, et al. (1962). Field evaluation of a human anthrax vaccine. Am J Public Health5263245.Friedland AM, Welkos SL, Pitt ML, et al. (1993). Postexposure prophylaxis against experimental ingestion anthrax. J Infect Dis542836.Glassman HN (1958) World incidence of anthrax in man. Public Health Rep73224.Meselson M, Guillemin J, Highes-Jones M, et al. (1994). The Sverdlovsk anthrax outbreak of 1979. Science 26612028.Schaffner W, LaForce FM. (1996). Training field epidemiologists Alexander D. Langmuir and the plaguey Intelligence Service. Am J Epidemiol 144S1622.Source document

Capital Structure in a Perfect Market

MBA509RecommendedChapterQuestions Thesequestions bethe taperofwhatIam cover chargeonthe fire examinationexam. directtheanswerstothesequestionsandshould nonbesurprisedbyanythingontheexam. Chapter 14 Capital Structure in a Perfect grocery store 14-5. think Alpha Industries and Omega Technologies decl be very(a) as settles that gene send identical nones f modests. Alpha Industries is an all- virtue secure, with 10 gazillion dole outs nifty that trade for a price of$22 per shargon. Omega Technologies has 20 zillion sh ars majuscule as well as debt of $60 cardinal. 14-5-a. harmonise to MM Proposition I, what is the tenor price for Omega Technologies? V(alpha) = 10 x 22 = 220m = V(omega) = D + E E = 220 60 = 160m p = $8 per share. 14-5-b. Suppose Omega Technologies channel topically trades for $11 per share. What arbitrage opportunity is operational? What assumptions are necessary to exploit this opportunity? Omega is overpriced. Sell 20 Omega, Buy 10 alpha and bo rrow 60. Initial = 220 220 + 60 = 60. postulates we potful trade shares at present-day(prenominal) prices & Assumes we nooky borrow at selfsame(prenominal) terms as Omega (or own Omega debt and can administer at same price). 4-6. Cisoft is a graduate(prenominal)ly profitable technology securely that catamenialy has $5 one thousand jillion in inter lurch. The steady has decided to design this cash to salvation shares from investors, and it has already advertised these plans to investors. Currently, Cisoft is an all truth steady with 5 billion shares outstanding. These shares currently trade for $12 per share. Cisoft has issued no opposite securities except for crease options to its employees. The current grocery store measure out of these options is $8 billion. 14-6-a. What is the pry of Cisofts non-cash assets?Assets = cash + non-cash, Liabilities = honor + options. non-cash assets = candour + options cash = 12 ? 5 + 8 5 = 63 billion 14-6-b. With faultle ss seat of government grocery stores, what is the food mart cheer of Cisofts equity later on share buy? What is the harbor per share? Equity = 60 5 = 55. Repurchase 5b / 12 = 0. 417b shares = 55 / 4. 583 = $12 4. 583 b shares remain Per share care for MBA509RecommendedChapterQuestions Thesequestionsarethe localizeofwhatIam cover versiononthefinalexam. learntheanswerstothesequestionsandshould nonbesurprisedbyanythingontheexam. 4-8. beg off what is wrong with the spare-time activity argument If a trusty issues debt that is find open, be scram at that place is no conjecture of default, the pretend of the plastereds equity does not change. Therefore, take chances-free debt al slumps the sozzled to get the service of a low hail of nifty of debt without gentility its cost of groovy of equity. Any leverage raises the equity cost of detonator. In fact, risk-free leverage raises it the most (beca character it does not share any of the risk). 14-12. Hubbard Indust ries is an all-equity warm whose shares come an tireded give up of 10%.Hubbard does a leveraged re chapiterization, way out debt and repurchasing bourgeon, until its debt=equity ratio is 0. 60. Due to the growingd risk, shareholders instantly expect a return of 13%. Assuming there are no evaluatees and Hubbards debt is risk free, what is the gratify rate on the debt? wacc = ru = 10% = 1 0. 6 x ? 1. 6(10) ? 13 = 3 = 0. 6 x ? x = 5% 13% + 1. 6 1. 6 14-17. Zelnor, Inc. , is an all-equity firm with degree Celsius million shares outstanding currently trading for $8. 50 per share. Suppose Zelnor decides to grant a rack up of 10 million unsanded shares to employees as fail of a unexampled compensation plan.The firm argues that this bran- red-hot compensation plan volition remind employees and is a better strategy that giving salary bonuses because it will not cost the firm anything. a. If the new compensation plan has no opinion on the revenue income revenue of Zelno rs assets, what will the share price of the new stock be once this plan is implemented? Assets = 850m. New shares = cx ? price = 850 = $7. 73 110 b. What is the cost of the plan for Zelnors investors? why is issuing equity costly in this case? Cost = 100(8. 50 ? 7. 73) = 77m = 10(7. 73) Issuing equity at below market place price is costly. MBA509RecommendedChapterQuestionsThesequestionsarethefocusofwhatIam bindingonthefinalexam. visualizetheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. Chapter 15 Debt and Taxes 15-1. Pelamed Pharmaceuticals has EBIT of $325 million in 2006. In addition, Pelamed has spare-time activity set downs of $125 million and a integrated valuate income rate of 40%. a. What is Pelameds 2006 net income? Net Income = EBIT affair Taxes = (325 125) x (1-0. 40) $120 million b. What is the total of Pelameds 2006 net income and kindle affordment? Net Income + Interest = 120 = 125 = $245 million c.If Pelamed had no interest expenses, what would its 2006 net income be? How does it compare to your answer in part (b)? NetIncome = EBIT ? Taxes = 325 ? (1 ? 0. 40) = $195 million This is 245 ? 195 = $50 million lower than part (b). d. What is the meat of Pelamedsinterest tax shield in 2006? Interest tax shield = 125 ? 40% = $50 million MBA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam. Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. 15-3. Suppose the corporal tax rate is 40%.Consider a firm that earns$ kelvin originally interest and taxes distributively form with no risk. The firms capital expenditures equals its deprecation expenses each year, and it will take a crap no change to its net working capital. The risk-free interest rate is 5%. a. Suppose the firm has no debt and move overs out its net income as a dividend each year. What is the valuate of the firms equity? NetIncome = 1000 ? (1 ? 40%) = $600. Thus, equity holders contact di vidends of $600 per year with no risk. 600 E= = $12, 000 5% b. Suppose instead the firm makes interest coverments of $500 per year. What is the value of equity?What is the value of debt? 300 = $6000 5% Debt holders receive interest of $500 per year ? D $10,000 NetIncome ? (1000 ? 500) ? (1 ? 0. 40) = $300 ? E c. What is the difference betwixt the total value of the firm with leverage and without leverage? With Leverage = 6,000 + 10,000 = $16,000 Without Levergae = $12,000 Difference = 16,000 12,000 = $4000 d. The difference in part is equal to what percentage of the value of the debt? 4, 000 = 40% = corporate tax rate 10, 000 MBA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam.Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. 15-6. Arnell Industries has $10 million in debt outstanding. The firm will net profit interest however on this debt. Arnells marginal tax rate is expected to be 35% for the foreseeable future day. a. Suppose Arnell pays interest of 6% per year on its debt. What is the annual interest tax shield? Interest tax sheild = $10 ? 6% ? 35% = $0. 21 million b. What is the present value of the interest tax shield, assuming its risk is the same as the loan? PV(Interest tax sheild) = $0. 21 = $3. 5 million 0. 06 c.Suppose instead that the interest rate on the debt is 5%. What is the present value of the interest tax shield in this case? Interest tax sheild = $10 ? 5% ? 35% = $0. one hundred s corey-five million $0. 175 = $3. 5 million PV = 0. 05 15-8. Rumolt Motors has 30 million shares outstanding with a price of $15 per share. In addition, Rumolt has issued bonds with a total current market value of 4150 MILLION. Suppose Rumolts equity cost of capital is 10%, and its debt cost of capital is 5%. a. What is Rumolts pretax weighted cost of capital? E = $15 ? 30 = $450m D = $150m Pretax WACC = 450 150 10% + 5% = 8. 75% 600 600 b.If Rumolts corporate rate is 35%, what is its after-tax weighted cost of capital? WACC = 450 150 10% = 5%(1 ? 35%) = 8. 3125% 600 600 MBA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam. Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. 15-12. Milton Industries expects free cash flow of $5 million each year. Miltons corporate tax rate is 35%, and its unlevered cost of capital is 15%. The firm desirewise has outstanding debt of $19. 05 million, and it expects to find this train of debt permanently. a.What is the value of Milton Industries without leverage? VU = 5 = $33. 33 million 0. 15 b. What is the value of Milton Industries with leverage? V L = V U + ? c D = 33. 33 + 0. 35 ? 19. 50 = $40 million 15-13. Kurz Manufacturing is currently an all-equity firm with 20 million shares outstanding and a stock price of $7. 50 per share. Although investors currently expect Kurz to remain an all-equity firm, Kurz plans to announce that it will borrow $50 million and use the funds to repurchase shares. Kurz will pay interest only on this debt, and it has no hike up plans to ontogeny or decrease the amount of debt.Kurz is subject to a 40% corporate tax rate. a. What is the market value of Kurzs existing assets in the beginning the announcement? Assets = Equity = $7. 50 ? 20 = $150 million b. What is the market value of Kurzs assets (including the tax shield) just after the debt is issued, but before the shares are repurchased? Assests = 150 (existing) + 50 (cash) + 40% ? 50 (tax sheild) = $220 million c. What is Kurzs share price just before the share repurchase? How numerous Shres will Kurz repurchase? E = Assets ? Debt = 220 ? 50 = $ clxx million $ clxxm = $8. 50 parcel of land hurt = 20 50 = 5. 882 million shares Kurz will repurchase 8. 50 d.What are Kurzs market value counterpoise canvass and share price after the share repurchase? Assets ? 150(existing ) + 40% ? 50(taxsheild ) = $170 million Debt = $50 million E = A ? D = 170 ? 50 ? $ 120 million $120 = $8. 50 / share Share price = 20 ? 5. 882 MBA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam. Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. 15-15. Suppose the corporate tax rate is 40%, and investors pay a tax rate of 15% on income from dividends or capital gains and a tax rate of 33. 3% on interest income.Your firm decides to add debt so it will pay an additional $15 million in interest each year. It will pay this interest expense by cut upting its dividend. a. How a great deal will debt holders receive after paid taxes on the interest they earn? $15 ? (1 ? 0. 333) = $10 million each year b. By how much will the firm need to cut its dividend each year to pay this interest expense? Given a corporate tax rate of 40%, an interest expense of $15 million per year tighten ups net income by 15(1-0. 4)=$9 million after corporate taxes. c. By how much will this cut in the dividend reduce equity h olders annual after-tax income? $9 million dividend cut ? 9 ? (1 ? 0,15) ? $7. 65 million per year d. How much little will the government receive in total tax revenues each year? Interest atxes = 0. 333 ? 15 = $5 million Less corporate taxes = 0. 40 ? 15 = $6 million Less dividend taxes = 0. 15 ? 9 = $1. 35 million note this equals (a) (c) e. What is the strong tax advantage of debt ? * ? (1 ? 0. 40)(1 ? 0. 15) ? * = 1? = 23. 5% 1 ? 0. 333 15-16. Markum Enterprises is considering permanently adding $100 million of debt to its capital structure. Markums corporate tax rate is 35%. a. Absent personal taxes, what is the value of the interest tax shield from the new debt?PV = ? c D = 35% ? 100 = $35 million b. If investors pay a tax rate of 40% on interest income, and a tax rate of 20% on income from dividends and capital gains, what is the value of the interest tax shield from new debt? ? * = 1? (1 ? 0. 35)(1 ? 0. 20) = 13. 33% 1 ? 0. 40 PV = ? C D = 13. 33% ? 100 = $13. 33 million M BA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam. Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. 15-19. With its current leverage, Impi breadbasket will have net income next year of $4. million. If Impis corporate tax rate is 35% and it pays 8% interest on its debt, how much additional debt can Impi issue this year and still receive the benefit of the interest tax shield next year? Net income of $4. 5 million ? 4. 5 = $6. 923 million in taxable income. Therefore, Arundel can amplify its interest expense by $6. 923 million, which corresponds to debt of 6. 923 = $86. 5 million 0. 08 MBA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam. Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam.Chapter 16 Financial Distress, managerial Incentives and Information 16-2. Baruk Industries has no cash and a debt obligation of $36 millionthat is now due. The m arket value of Baruks assets is $81 million, and the firm has no liabilities. Assume a perfect capital market. a. Suppose Baruk has 10 million shares outstanding. What is Baruks current share price? 81 ? 36 = $4. 5 / share 10 b. How many new shares mustiness Baruk issue to raise the capital needed to pay its debt obligation? 36 = 8 million shares 4. 5 c. After repaying the debt, what will Baruks share price be? 81 = $4. 5 / share 18 16-3.When a firm defaults on its debt, debt holders oft receive less than 50% of the amount they are owed. Is the difference between the amount debt holders are owed and the amount they receive a cost of nonstarter? No. Some of these losses are due to declines in the value of the assets that would have occurred whether or not the firm defaulted. Only the incremental losses that arise from the bankruptcy process are bankruptcy costs. 16-4. Which type of firm is more seeming to experience a loss of customers in the event of monetary affliction a. Ca mpbell Soup Company or Intuit, Inc.? Intuit Inc. its customers will care about their ability to receive upgrades to their packet. b. Allstate Corporation or Reebok planetary? Allstate Corporation its customers rely on the firm being able to pay future claims. MBA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam. Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. 16-5. Which type of assets is more likely to be liqui ensured for close to its honorable market value in the event of financial detriment? a. An office construction or a brand name?Office buildingthere are many alternate users who would be likely to value the blank space similarly. b. Product inventory or raw materials? Raw materialsthey are easier to reuse. c. unmistakable right of engineering know-how? Patent rightsthey would be easier to sell to another firm. 16-9. Marpor Industries has no debt and expects to turn over free cash flows of $16 millio n each year. Marpor recalls that if it permanently increases its level of debt to $40 million, the risk of financial distress may cause it to lose some customers and receive less favorable terms from its suppliers.As a result, Marpors free cash flows with debt will be only $15 million per year. Suppose Marpors tax rate is 35%, the risk-free rate is 5%, the expected return of the market is 15%, and the important of Marpors free cash flows is 1. 1. (with or without leverage). a. Estimate Marpors value without leverage r = 5% + 1. 1? (15% ? 5%) = 16% 16 V= = $100 million 0. 16 b. Estimate Marpors value with the new leverage. r = 5% + 1. 1? (15% ? 5%) = 16% 15 V= + 0. 35 ? 40 = $107. 75 million 0. 16 MBA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam.Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. 16-10. Real Estate Purchases are often financed with at least 80% debt. Most corporations, however, have less that 50% debt financing. Provide an explanation for this difference exploitation the trade-off possible action. consort to tradeoff theory, tax shield adds value while financial distress costs reduce a firms value. The financial distress costs for a real estate investment are likely to be low, because the property can generally be easily resold for its full market value.In contrast, corporations generally face much blueer costs of financial distress. As a result, corporations choose to have lower leverage. 16-11. Dynron Corporations primary stackiness is natural gas transportation using its broad gas pipeline network. Dynrons assets currently have a market value of $150 million. The firm is exploring the possibility of raising $50 million by selling part of its pipeline network and place the $50 million in a fiber-optic network to generate revenues by selling high-speed network bandwidth.While this new investment is expected to increase profits, it will also substantially increase Dy nrons risk. If Dynron is levered, would this investment be more or less attractive to equity holders than if Dynron had no debt? If Dynron has no debt or if in all scenarios Dynron can pay the debt in full, equity holders will only consider the projects NPV in making the decision. If Dynron is heavily leveraged, equity holders will also gain from the increased risk of the new investment. 16-18. Which of the following industries have low optimal debt levels according to the tradeoff theory? Which have high optimal levels of debt? a.Tobacco firms high optimal debt levelhigh free cash flow, low growth opportunities Accounting firms low optimal debt levelhigh distress costs Mature eatery chains high optimal debt levelstable cash flows, low growth, low distress costs Lumber companies high optimal debt levelstable cash flows, low growth, low distress costs booth phone manufacturers low optimal debt levelhigh growth opportunities, high distress costs b. c. d. e. MBA509RecommendedChapterQu estions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam. Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. 6-19. According to the managerial entrenchment theory, managers choose capital structures so as to preserve their direct of the firm. On the one hand, debt is costly for managers because they risk losing control in the event of default. On the other hand, if they do not take advantage of the tax shield provided by debt, they risk losing control through a hostile takeover. Suppose a firm expects to generate free cash flows of $90 million per year, and the discount rate for these cash flows is 10%. The firm pays a tax rate of 40%. A marauder is poised to take over the firm and finance it with $750 one thousand thousand in permanent debt.The raider will generate the same free cash flows, and the takeover attempt will be successful if the raider can offer a premium of 20% over the current value of the firm. What level of permanent debt will the firm choose, according to the managerial entrenchment hypothesis? 90 = $900 0. 10 Levered value w/ brigand = 900 + 40%(750) = $1. 2 billion To prevent successful raid,l current managment must have a levered value of at least $1. 2 billion = $1 billion 1. 20 Thus, the minimum tax sheild is $1 billion 900 million = $100 million, 100 which requires = $250 million in debt 0. 40 Unlevered Value = MBA509RecommendedChapterQuestionsThesequestionsarethefocusofwhatIamcoveringonthefinalexam. Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. Chapter 17 Payout Policy 17-6. The HNH Corporation will pay a constant dividend of $2 per share, per year, in perpetuity. Assume all investors pay a 20% tax on dividends and that there is no capital gains tax. The cost of capital for investing in HNH stock is 12%. a. What is the price of a share of HNH stock? P=$1. 60/0. 12=$13. 33 b. Assume that management make a surprise announcement that HNH will no longer pay dividen ds but will use the cash to repurchase stocks instead.What is the price of a share of HNH stock now? P=$2/0. 12=$16. 67 17-7. What was the feative dividend tax rate for a U. S. investor in the highest tax support who planned to hold a stock for one year in 1981? How did the rough-and-ready dividend tax rate change in 1982 when the Reagan tax cuts took effect? (Ignore State taxes. ) 58. 33% in 1981 and 37. 5% in 1982. 17-10. At current tax rates, which investors are most likely to hold a stock that has a high dividend yield? a. Individual Investors b. Pension Funds c. joint Funds d. Corporations 17-11. A stock that you know is held by long-run respective(prenominal) investors paid a large one-time dividend.You notice that the price dropped on the ex-dividend date is about the size of the dividend payment. You find this relationship puzzling given the tax disadvantage of dividends. Explain how the dividends-capture theory mogul account for this behavior. Dividend capture theory states that investors with high effective dividend tax rates sell to investors with low effective dividend tax rates just before the dividend payment. The price drop therefrom reflects the tax rate of the low effective dividend tax rate individuals. MBA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam.Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. 17-16. Explain under which conditions an increase in the dividend payment can be interpreted as a signal of a. Good news By increasing dividends managers signal that they believe that future earnings will be high enough to maintain the new dividend payment. b. Bad news Raising dividends signals that the firm does not have any positive NPV investment opportunities, which is bad news. 17-17. Why is an announcement of a share repurchase considered a positive signal?By choosing to do a share repurchase management credibly signals that they believe the stock is undervalued . 17-20. Explain why most companies choose to pay stock dividends (split their stock). Companies use stock splits to keep their stock prices in a range that reduces investor achievement costs 17-21. When might it be advantageous to undertake a lapsing stock split? To avoid being delisted from an exchange because the price of the stock has fallen below the minimum required to stay listed. 17-22. After the market close on may 11, 2001, Adaptec, Inc. , distributed a dividend of shares of he stock of its software division, Roxio, Inc. Each, Adaptec shareholder received 0. 1646 share of Roxio stock per share of Adaptec stock owned. At the time Adaptec stock was trading at a price of $10. 55 per share (cum-dividend), and Roxies share price was $14. 25 per share. In a perfect market, what would Adaptecs ex-dividend share price be after this act? The value of the dividend paid per Adaptec share was (0. 1646 shares of Roxio) ? ($14. 23 per share of Roxio) = $2. 34 per share. Therefore, i gnoring tax effects or other news that might come out, we would expect Adaptecs stock price to fall to $10. 5 2. 34 = $8. 21 per share once it goes ex-dividend. (Note In fact, Adaptec stock opened on Monday May 14, 2001 the next trading day at a price of $8. 45 per share. ) MBA509RecommendedChapterQuestions ThesequestionsarethefocusofwhatIamcoveringonthefinalexam. Understandtheanswerstothesequestionsandshouldnotbesurprisedbyanythingontheexam. Explain the semipermanent (3 to 5 years) relative stock performance of companies that have i) issued a seasoned equity offering ii) split their stocks Why would a stock split be a signal for good news?What is meant by leaving money on the table, when issuing an IPO? Why might issuing management be content to leave a lot of money on the table? Can you spot the period of a stock market bubble in the table below? (Hint come along for an oval ) In retrospect, do you think it is a good long-term investment to purchase stocks where there has bee n huge amounts of money left on the table? Table 1 Summary Statistics for 6,312 IPOs with Offer Price ? $5. 00 think about First-day Return 7% 15% 65% 12% 19% Average, 2001 Dollars coin Left on the Table Gross Proceeds $2. million $10 million $82 million $29 million $17 million $42 million $72 million $161 million $397 million $81 million Period 1980-1989 1990-1998 1999-2000 2001-2002 1980-2002 Describe how investment banks allocate IPO shares using the bookbuilding method. Are IPOs, as a group and over time, good long-term investments in terms of average annual returns? Describe how IPOs are like Lotto tickets. (Low expected returns, but with relatively low probability of exceedingly large gainsbuying into Microsoft, Intel, etc) Hint this is the answer.Describe Graham and Kumars suggestive raise that there is, indeed, a backup effect for dividends. Which class of investors like high dividend yields? Which age bracket? How do these finding suggest a clientele effect? Chapter14. CapitalStructureinaPerfectMarket Summary 1. Thecollectionofsecuritiesafirmissuestoraisecapitalfrominvestorsiscalledthe firmscapitalstructure. Equityanddebtarethesecuritiesmostcommonlyuseby firms. Whenequityisusedwithoutdebt,thefirmissaidtobeunlevered. Otherwise,the amountofdebtdeterminesthefirmsleverage. . Theownerofafirmshouldchoosethecapitalstructurethatmaximizesthetotalvalue ofthesecuritiesissued. 3. Capitalmarketsaresaidtobeperfectiftheysatisfythreeconditions a. Investorsandfirmscantradethesamesetofsecuritiesatcompetitivemarket pricesequaltothepresentvalueoftheirfuturecashflows. b. Therearenotaxes,transactioncosts,or topiccostsassociatedwithsecurity trading. c. Afirmsfinancingdecisionsdonotchangethecashflowsgeneratedbyits investments,nordotheyrevealnewinformationaboutthem. 4.AccordingtoMMPropositionI,withperfectcapitalmarketsthevalueofafirmis independentofitscapitalstructure. a. Withperfectcapitalmarkets, homespunleverageisaperfectsubstituteforfirm leverage. b. Ifotherwiseident icalfirmswithdifferentcapitalstructureshavedifferentvalues, theLawofOnePricewouldbeviolatedandanarbitrageopportunitywould exist. 5. Themarketvaluebalancesheetshowsthatthetotalmarketvalueofafirmsassets equalsthetotalmarketvalueofthefirmsliabilities,includingallsecuri tiesissuedto investors.Changingthecapitalstructurethereforealtershowthevalueoftheassetsis dividedacrosssecurities,butnotthefirmstotalvalue. 6. Afirmcanchangeitscapitalstructureatanytimebyissuingnewsecuritiesandusing thefundstopayitsexistinginvestors. Anexampleisaleveragedrecapitalizationin whichthefirmborrowsmoney(issuesdebt)andrepurchasesshares(orpaysa dividend). MMPropositionIimpliesthatsuchtransactionswillnotchangetheshare price. 7. AccordingtoMMPropositionII,thecostofcapitalforleveredequityis 8. Debtisless unsafethanequity,soithasalowercostofcapital.Leverageincreasestherisk ofequity,however,raisingtheequitycostofcapital. Thebenefitofdebtslowercostof capitalis kickoffbythehigherequitycostofcapital,leavingafirmsweight edaverage costofcapital(WACC)unchangedwithperfectcapitalmarkets 1 9. Themarketriskofafirmsassetscanbeestimatedbyitsunleveredbeta 10. Leverageincreasesthebetaofafirmsequity 11. Afirmsnetdebtisequaltoitsdebtlessitsholdingsofcashandotherrisk? free securities. Wecancomputethecostofcapitalandthebetaofthefirmsbus