exam1d.ch1ch2ch2Ach5partial (1)

# exam1d.ch1ch2ch2Ach5partial (1) - Name Webct User ID...

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Name __________________________________ Webct User ID __________________________________ University of Houston C. T. Bauer College of Business Principles of Financial Management Finance 3332 Spring, 2009 Exam 1 D To receive full credit, show all work—equations in variable form, equations with numbers plugged in—and clearly indicate your answer. Financial functions may be used ONLY for finding annuity factors, and all inputs must be shown. Round answers decimals to 4 places where applicable Point values are in parentheses. 1. A put option gives the holder, or owner, of the option, the right to _________ a specified asset at the specified  exercise price on or before a specified expiration date. (4) 2. A corporate bond is yielding ten percent, and a municipal bond of equivalent risk yields eight percent. Which bond is  preferred by an investor who has a thirty percent marginal tax rate? Justify your answer with calculations. (6) 3. Given the following information for Westan Corporation, determine the firm’s taxable income.  (6) Sales $40 million Operating expenses 25 million Interest income 8 million Interest expense 16 million Dividend income 4 million Dividends paid 6 million 4. The earnings of Pheasant Corporation have grown from$0.40 per share to $0.80 per share over the past 10 years. What has been the annual rate of growth in the firm’s earnings? (8) 5. Five months ago I purchased 700 shares of stock for$80 per share, and the stock is now worth $82 per share. Last week, I received a dividend check totaling$1400. What is my holding period return? (8)

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6. What is the annualized premium or discount between the spot rate and the six month forward rate for U.K. Pound?
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exam1d.ch1ch2ch2Ach5partial (1) - Name Webct User ID...

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