Chapter 5 Mini-Case: bonds, bonds valuation and interest rates.
d. What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required rate of return is 10%?
Years to Maturity
Coupon rate:
Annual Pmt ($):
Par value = FV ($):
Goi
Question 1
0 out of 2.25 points
The type of risk
that includes
controls on
exports, imports,
controls on the
movement of
currency,
restrictions on
licensing and
investment, and
controls over
physical property
located in a
country is:
Answer
Selected Answ
1
BA 501: Assignment 1-solutions: Chapters: 1, 2, and 3: Total 125 points
due by Midnight (11:59 pm), Monday, July 20th, 2015
True / False Questions (You can type T for True and F for False) (2 points each)
Chapters 1 and 2
1. The weight of a Hamburger pa
Question 1
1 out of 1 points
If an individual
investor buys or
sells a currently
outstanding stock
through a broker,
this is a primary
market
transaction.
Answer
Correct Answer: False
Question 2
1 out of 1 points
Money markets
are markets for
Answer
Corr
Question 17
Based on the corporate valuation model, the value of a company's operations is $1,200 million. The
company's balance sheet shows $80 million in accounts receivable, $60 million in inventory, and
$100 million in short-term investments that are
Question 1
0 out of 0.5 points
Toombs Media Corp. recently completed a 3-for-1 stock split. Prior to the split, its stock sold
for $150 per share. The firm's total market value was unchanged by the split. Other things
held constant, what is the best estim
Which of the following statements is CORRECT? Assume that the project being considered has
normal cash flows, with one outflow followed by a series of inflows.
Answer
Correct
Answer:
One drawback of the regular payback for evaluating projects is that thi
Question 27
0.5 out of 0.5 points
During the year,
Bascom Bakery
Inc. paid out
$21,750 of
common
dividends. It
ended the year
with $187,500 of
retained earnings
versus the prior
year's retained
earnings of
$132,250. How
much net income
did the firm earn
Question 28
Stern Associates is considering a project that has the following cash flow data. What is the project's
payback?
Year
Cash flows
0
$1,100
1
$300
2
$310
3
$320
4
$330
5
$340
Answer
Correct Answer:
3.52 ye
rs
0 out of 0.5 points
Bankston
Corpora
Question 1
0 out of 0.5 points
The trade-off
theory states that
the capital
structure decision
involves a tradeoff
between the costs
and benefits of
debt financing.
Answer
Correct Answer:
True
Question 2
0 out of 0.5 points
Which of the
following
stateme
Question 29
0 out of 0.5 points
Becker Financial
recently
completed a 7for
Prior to the split,
its stock sold for
$90 per share. If
the total market
value was
unchanged by the
split, what was
the price of the
stock following
the split?
Answer
Correct
Answ
Question 1
A stock with a beta equal to 1.0 has zero systematic (or market) risk.
Answer
Correct Answer:
False
he standard deviation is a better measure of risk than the coefficient of variation if the expected
returns of the securities being compared di
Question 1
0 out of 0.5 points
Teall Development Company hired you as a consultant to help them estimate its cost of
capital. You have been provided with the following data: D1 = $1.45; P0 = $22.50; and g
= 6.50% (constant). Based on the DCF approach, wh
Question 1
0 out of 0.5 points
You recently sold
100 shares of your
new company,
XYZ Corporation,
to your brother at
a family reunion.
At the reunion
your brother gave
you a check for
the stock and you
gave your brother
the stock
certificates. Which
of t
Question 1
0 out of 1.5 points
Which of the
following
statements is
CORRECT,
assuming positive
interest rates and
holding other
things constant?
Answer
Correct Answer:
Question 2
0 out of 1.5 points
You want to buy a
new ski boat 2
years from now,
and yo
Debt management ratios show the extent to which a firm's managers are attempting to magnify
returns on owners' capital through the use of financial leverage.
Answer
Correct Answer:
True
Question 2
0.5 out of 0.5 points
Bartling Energy
Systems recently
re
Question 1
0 out of 1.5 points
Exchange rates
influence a
multinational
firm's inventory
policy because
changing currency
values can affect
the value of
inventory.
Answer
Correct Answer:
True
Question 2
0 out of 1.5 points
Exchange rate risk
is the risk
85) Which of the following is a factor considered when a customer is evaluated based on RFM
(1point)
formula?
the mode of payment used by the customer
the amount of time passed after the customer's last visit
the type of feedback provided by the customer
Question 1
0 out of 0.5 points
The change in net
working capital
associated with
new projects is
always positive,
because new
projects mean that
more working
capital will be
required. This
situation is
especially true for
replacement
projects.
Answer
Cor
Question 1
0 out of 0.5 points
Consider the
following
information for
three stocks, A, B,
and C. The stocks'
returns are
positively but not
perfectly
positively
correlated with
one another, i.e.,
the correlations
are all between 0
and 1.
Stock
A
B
C
Expe
Question 1
1.5 out of 1.5 points
You are
considering two
equally risky
annuities, each of
which pays $5,000
per year for 10
years. Investment
ORD is an
ordinary (or
deferred) annuity,
while Investment
DUE is an annuity
due. Which of the
following
stateme
Question 1
0 out of 1.5 points
Exchange rate quotations consist solely of direct quotations.
Answer
Correct Answer:
False
Question 3
0 out of 1.5 points
Suppose a foreign investor who holds tax-exempt Eurobonds paying 9% is considering
investing in an eq
b. 1.
What is the future value of an initial $100 after 3 years if it is invested in an account paying 10 percent annual interest?
interest rate
Cash flow
0.1
100
Time period
FV
0
100
b. 2.
1
$110.00
2
$121.00
3
$133.10
What is the present value of $100 t
0 out of 0.5 points
Teall
Development
Company hired
you as a
consultant to help
them estimate its
cost of capital.
You have been
provided with the
following data:
D1 = $1.45; P0 =
$22.50; and g =
6.50% (constant).
Based on the DCF
approach, what is
the co
Memorandum
Thepurposeofthismemoistocompletebasicdiscountedcashflowcalculations.The
conceptsandspecificityarerevealedthroughansweringthefollowingquestions.
In order to succeed in further evaluation process, the prepared paper provides
definitions,calcula
Question 11
0 out of 0.5 points
For a typical firm,
which of the
following
sequences is
CORRECT? All
rates are after
taxes, and assume
that the firm
operates at its
target capital
structure.
Answer
Correct Answer:
re > r
>r
Question 12
0 out of 0.5 point
Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO,
wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full
capacity. Data for use in your forecast are shown below. Based on the A
BA 501: Assignment 3-sol: Chaps: 8, and 9: Total 125 points including one
point for attempting all questions. Due by Midnight (11:59 pm), Monday,
August 3rd, 2015
True / False Questions (2 points each)
Chapter 8
1. The sampling distribution of
X
is not al