Martha B's Has Total Assets of $1,750

question 56

Multiple Choice

Martha B's has total assets of $1,750.These assets are expected to increase in value to either $1,800 or $2,400 by next year.The company has a pure discount bond outstanding with a face value of $2,000.This bond matures in one year.Currently,U.S.Treasury bills are yielding 6 percent.What is the value of the equity in this firm?

• A)$16.98
• B)$34.59
• C)$36.67
• D)$37.08
• E)$51.89

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Definitions:

Subsidiaries

Companies that are fully or partly owned and partly or wholly controlled by another company, known as the parent company.

Investor

An individual or organization that allocates capital with the expectation of receiving financial returns, often through the purchase of securities, real estate, or other investment assets.

Investee

The entity in which an investor holds an interest, often evidenced through ownership of securities or equity.