Business Finance Exam 3 Solution
The Carter Company's bonds mature in 10 years, have a par value of $1,000 and a coupon rate of 11%. The market interest rate for the bonds is 9%. What is the price of these bonds? a.
Fin 3010 Exam III Summer 2009 Time: 100 minutes
1. In constant growth model, expected capital gains yield changes year to year. a. True b. False 2. Expected dividend divided by the current price of a stock is called a. Actual Dividend b. Dividend Growth c
The value of an asset depends on the historical cash flow(s) up to the
Valuation is the process that links risk and return to determine the
worth of an asset.
The value of an asset is determined by discounting the expec
Holders of equity have claims on both income and assets that are
secondary to the claims of creditors.
The tax deductibility of interest lowers the cost of debt financing,
thereby causing the cost of debt financing to be lower than the cost of
Finance can be defined as the science and art of managing money
is concerned with the duties of the financial manager working in a business.
is a business owned by one person and operated for his or her own profit.
Current ratio = Current assets Current liabilities
(current assets-inventory)/current liabilities
Inventory turnover =
Cost of goods sold Inventory
Average Age of Inventory =
average collection period=
comprehensive exam question bank
Multiple Choice Identify the choice that best completes the statement or answers the question. _ 1. What would the future value of $100 be after 5 years at 10% compound interest? a. $161.05 b. $134.54 c. $127.84 d. $151.29
1. The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to _. (Points: 4) maximize its expected total corporate income maximize its expected EPS minimize the chances of losses maximize the stock price per sh
Question: Rollincoast Incorporated issued BBB bonds two years ago that provided a yield to maturity of 11.5%. Long-term risk-free government bonds were yielding 8.7% at that time. The current risk premium on BBB bonds versus government bonds is half of
4. Debentures such as convertible bonds are unsecured bondsthat’ m 'i
most creditworthy ﬁrms can issue.
(" j / 5. As an outstanding bond approaches maturity, the price of the and W111 always
_'_ toward par value until, at maturity, the bond is worth