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exercise_4 (3) - 5 Distinguish fully between(a par value...

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MA826 FINANCE AND FINANCIAL REPORTING Exercise 4 1. If you bought on 1 January 2005 a £100 nominal of a 5% government bond which you can redeem on 31 December 2010, how much would you receive in total? 2. Explain the inverse relationship between the interest rate and the price of a bond. 3. Complete the following table comparing ordinary shares with preference shares. ordinary shares preference shares Voting rights Dividends Importance for company Different varieties Priority on winding up the company 4. In what ways are preference shares like debt? In what ways are they like ordinary shares?
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Unformatted text preview: 5. Distinguish fully between: (a) par value and market value of shares (b) authorized and issued share capital (c) preference shares and ordinary shares (d) loan capital and ordinary share capital (e) fixed and floating charges (f) debentures and unsecured loan stocks (g) Eurobonds and traditional forms of UK loan capital. 6. GHI plc issues £500,000 of convertible loan stock. Each £5.00 of stock can be converted into 4 ordinary shares on 1 January 2010. The current share price is 86p and the loan stock is traded at par. Calculate the conversion premium....
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