Answers to Practice Questions
1) c (Since the bond is trading at a discount, you will realize a capital loss if you sell it
today)
2) c PV=25000; FV=0; PMT= -30.76; I=21/365; CPT N
3)
b (Using the APR to EAR conversion formula)
4) c PV= -5000 ; FV=10000;
Tax Practice and Ethics
26-1
CHAPTER 26
TAX PRACTICE AND ETHICS
EXAMINATION QUESTIONS
1.
Which of the following statements properly characterizes
letter rulings?
a. They are different from determination letters.
26-2
2014 Comprehensive Edition
b. They can
CHAPTER 7 INTEREST RATES AND BOND VALUATION
Answers to Concepts Review and Critical Thinking Questions 1. 2. 3. No. As interest rates fluctuate, the value of a Treasury security will fluctuate. Long-term Treasury securities have substantial interest rate
CHAPTER 4 LONG-TERM FINANCIAL PLANNING AND GROWTH
Answers to Concepts Review and Critical Thinking Questions 1. The reason is that, ultimately, sales are the driving force behind a business. A firms assets, employees, and, in fact, just about every aspect
Income Taxation of Trusts and Estates
28- 1
CHAPTER 28
INCOME TAXATION OF TRUSTS AND ESTATES
EXAMINATION QUESTIONS
1.
The trustee of the Fillmore Trust must distribute currentyear annual accounting income to its sole beneficiary,
Annie. The trust's person
More practice problems
1. Suppose you borrowed $12,000 at a rate of 9% and must repay it in 4 equal installments at the end of
each of the next 4 years. How much principal would you have to pay in the first year?
a. $3,000.00
b. $1,974.70
c. $1,026.00
d.
CHAPTER 29 Mergers and Acquisitions
Multiple Choice Questions: I. DEFINITIONS
MERGER a 1. The complete absorption of one company by another, wherein the acquiring firm retains its identity and the acquired firm ceases to exist as a separate entity, is cal
Review and Sample Test Questions
Chapter 5 Introduction to Valuation: The Time Value of Money
1. For a given positive interest rate R and for more than one year, the PVIF is greater than
1.0
a) True b) False
2. The present value of $1,000 to be paid ten y
I.
REVIEW
Long Term Financial Planning and Growth (Chapter 4)
A.Overview
B.Financial Planning Models
C.Percentage of Sales Approach
D.External Financing and Growth
E. Caveats about Financial Planning Models
Example
Profit margin is 15% and the retention r
Multistate Corporate Taxation
24-1
CHAPTER 24
MULTISTATE CORPORATE TAXATION
EXAMINATION QUESTIONS
1.
Citrine Corporation is subject to a corporate income tax
only in State X. The starting point in computing X taxable
income is Federal taxable income.
Citr
4
Student: _
1.
The major secondary market for GE shares is:
A. London Stock Exchange.
B. New York Stock Exchange.
C. Nasdaq.
D. Tokyo Stock Exchange.
2.
Assume General Electric (GE) has about 10.3 billion shares outstanding and the stock price is $37.10.
3
Student: _
1.
The following entities issue bonds to engage in long-term borrowing EXCEPT:
A. the federal government
B. state and local governments
C. corporations
D. individuals
2.
The type of bonds where the identities of bond owners are recorded and t
CHAPTER 10: MAKING CAPITAL INVESTMENT DECISIONS
Solutions to Questions and Problems
NOTE: All end of chapter problems were solved using a spreadsheet. Many problems require
multiple steps. Due to space and readability constraints, when these intermediate
Review and Sample Test Questions
Chapter 7 Interest Rates and Bond Valuation
1. You are offered a bond with an annual coupon of 8%. Its yield to maturity is 5%. This
bond will be priced at a discount relative to its par value.
a) True b) False
2. You mana
Chapter 06
Discounted Cash Flow Valuation
Multiple Choice Questions
1. An ordinary annuity is best defined by which one of the following?
A. increasing payments paid for a definitive period
of time
B. increasing payments paid
forever
C. equal payments pai
1. You own a bond that has a 7 percent coupon and matures in
12 years. You purchased this bond at par value when it was
originally issued. If the current market rate for this type and
quality of bond is 7.5 percent, then you would expect:
a. the bond issu
Chapter 06 - Discounted Cash Flow Valuation
Chapter 06
Discounted Cash Flow Valuation
Multiple Choice Questions
1. An ordinary annuity is best defined by which one of the following?
A. increasing payments paid for a definitive period of time
B. increasing
Chapter 3 The Time Value of Money
Solutions to End-of-Chapter Problems
Future Value of a Lump Sum
P3-1. You have $1,500 to invest today at 7 percent interest compounded annually.
a. How much will you have accumulated in the account at the end of the follo
CHAPTER 4: LONG-TERM FINANCIAL PLANNING AND GROWTH
Solutions to Questions and Problems
NOTE: All end of chapter problems were solved using a spreadsheet. Many problems require multiple
steps. Due to space and readability constraints, when these intermedi
1.
QUESTION 1
The price sensitivity of a bond increases in response to a change in the market rate of interest as
the:
Coupon rate increases.
Time to maturity decreases.
Coupon rate decreases and the time to maturity increases.
Time to maturity and coupon
PART 3
Valuation of Future Cash Flows
Most ofthis information is self—explanatory. The price $11 L79 is the real—time price of
the last trade. Availability of real—time prices for free is a relatively new development. The
reported change is from t
Chapter 1
Review Questions
1. What is the primary goal of corporate governance?
To create a balance of power-sharing among shareholders, directors, and
management to enhance shareholder value and protect the interests of other
stakeholders.
2. What is the
taxability premium
The portion of a nominal
interest rate or bond yield that
represents compensation tor
unfavorable tax status.
liquidity premium
The portion of a nominal
interest rate or bond yield that
represents compensation iur
lack at liquidity.
PA
1. There are four pieces to an annuity present value. What are they?
Present value, periodic cash flow, discount rate and the number of payments
or the life of the annuity.
2. As you increase the length of time involved, what happens to the present value
Raising Capital
Raj Nahata
Key Concepts and Skills
Understand how securities are sold
to the public and the role of
investment bankers
Understand initial public offerings
and the costs of going public
Understand how rights are issued
to existing sharehold
ECO 4000: Statistical Analysis for Economics and
Finance
Chapter 2: Review of Probability
Section: 2.1, 2.2, 2.3, 2.4 (normal)
Random variables
Today is the second class of this course: do you know exactly what your
final grade will be in this course? Are
Chapter 9
Net Present Value
and Other
Investment
Criteria
McGrawHill/Irwin
Stages in Capital Budgeting
1. Project development and classification
We will assume this part has already been
done.
2. Estimation of cash flows
Initial Investment [I0]
Operati
Answers to Practice Questions
1) c (Since the bond is trading at a discount, you will realize a capital loss if you sell it
today)
2) c PV=25000; FV=0; PMT= -30.76; I=21/365; CPT N
3)
b (Using the APR to EAR conversion formula)
4) c PV= -5000 ; FV=10000;
CHAPTER61
Chapter 6 Solutions to Questions and Problems
NOTE: Many problems require multiple steps. Due to space and readability constraints, when these
intermediate steps are included in this solutions manual, rounding may appear to have occurred. Howeve