1. Three $1,000 face value bonds that mature in 10 years have the same level of risk, hence their YTMs are equal. Bond A has an 8% annual coupon, Bond B has a 10% annual coupon, and Bond C has a 12% annual coupon. Bond B sells at par. Assuming interest rates remain constant for the next 10 years, which of the following statements is CORRECT? Answer: D. Bond A sells at a discount (its price is less than par), and its price is expected to increase over the next year. Explanation: Discount because As' return is lower than the one demanded by market. Price will increase because the smaller YTM the smaller discount (or bigger premium) for difference in bonds' and market returns.

2. Which of the following statements is CORRECT?
Answer: E. The actual life of a callable bond will always be equal to or less than the actual life of a noncallable bond with the same maturity. Therefore, if the yield curve is upward sloping, the required rate of return will be lower on the callable bond. Explanation: A callable bond (also called redeemable bond) is a type of bond (debt security) that allows the issuer of the bond to retain the privilege of redeeming the bond at some point before the bond reaches its date of maturity. In other words, on the call date(s), the issuer has the right, but not the obligation, to buy back the bonds from the bond holders at a defined call price. Technically speaking, the bonds are not really bought and held by the issuer but are instead cancelled immediately.

3. Which of the following statements is CORRECT?
Answer: A. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yield and a higher capital gains yield than the par bond.

4. Suppose a new company decides to raise a total of $200 million, with $100 million as common equity and $100 million as long-term debt. The debt can be...

...FIN534 Quiz 1 Week 1
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Question 1
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 the...

...percent for the next three years, and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in year 3 and 4. (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answers to the nearest whole number.)
Number of copies sold after 3 years
Number of copies sold in the fourth year
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Question 2
Find the present value of $3,500...

...FIN534 Discussion Questions Week 1-11 Solution
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FIN534Week 1-11 Discussion Questions Solved
Week 1 DQ 1...

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Answer
Selected Answer:
The outstanding balance declines at a faster rate in the later years of the loan’s life.
Correct Answer:
The outstanding balance declines at a faster rate in the later years of the loan’s life.
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Question 3
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2 out of 2 points
You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would lower the calculated value of the investment?...

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MAT540 Week3HomeworkChapter 14
1. The Hoylake Rescue Squad receives an emergency call every 1, 2, 3, 4, 5, or 6 hours, according to the following probability distribution. The squad is on duty 24 hours per day, 7 days per week:
Time Between
Emergency Calls (hr.)
Probability
1
0.05
2
0.10
3
0.30
4
0.30
5
0.20
6
0.05
1.00...

...policy.
2. Which of the following statements is CORRECT?
c. Stock repurchases can be used by a firm that wants to increase its debt ratio. Stock repurchases reduce the number of shares outstanding and are often accompanied by a stock price increase.
3. Which of the following statements is CORRECT?
e. If a firm’s stock price is quite high relative to most stocks—say $500 per share—then it can declare a stock split of say 10-for-1 so as to bring the price down to something...

...FIN534 Midterm Exam 1
1. Of the following investments, which would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero.
2. You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would increase the calculated value of the investment?
3. Which of the following statements regarding a...

...FIN 370 Week3 Problems 4–6 through 5–6
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4-6. A cash budget is usually thought of as a means of planning for future financing needs....