ABC company and XYZ company need to raise funds to pay for capital improvements at their manufacturing plants. ABC company is a well-established firm with an excellent credit rating in the debt market; it can borrow funds either at 11 percent fixed rate or at LIBOR + 1 percent floating rate. XYZ company is a fledgling start-up firm without a strong credit history. It can borrow funds either at 10 percent fixed rate or at LIBOR + 3 percent floating rate. a, Is there an opportunity here for ABC and XYZ to benefit by means of an interest rate swap?

b, Suppose you’ve just been hired at a bank that acts as a dealer in the swaps market, and your boss has shown you the borrowing rate information for your clients ABC and XYZ. Describe how you could bring these two companies together in an interest rate swap that would make both firms better off while netting your bank a 2.0 percent profit.

You are the new chief information officer for the video-game developer, necturus games. the company has recently undergone a major expansion of its primary product, and you must staff up the is department and determine the best way to develop new game "capsules" for the game, "escape velocity."

Exercise 18-15 sheffield appliance center is an experienced home appliance dealer. sheffield appliance center also offers a number of services for the home appliances that it sells. assume that sheffield appliance center sells ovens on a standalone basis. sheffield appliance center also sells installation services and maintenance services for ovens. however, sheffield appliance center does not offer installation or maintenance services to customers who buy ovens from other vendors. pricing for ovens is as follows. oven only $790 oven with installation service 850 oven with maintenance services 970 oven with installation and maintenance services 990 in each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $180. additionally, the incremental amount charged by sheffield appliance center for installation approximates the amount charged by independent third parties. ovens are sold subject to a general right of return. if a customer purchases an oven with installation and/or maintenance services, in the event sheffield appliance center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $790. assume that a customer purchases an oven with both installation and maintenance services for $990. (b) indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract.

Why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms? a. unlike incumbent firms, new entrants do not have to face the high entry barriers, initially. b. new entrants are embedded in an innovation ecosystem, while incumbent firms are not. c. unlike incumbent firms, new entrants do not have formal organizational structures and processes. d. incumbent firms do not have the advantages of network effects that new entrants have.