F600 Summer 2013 Assignment 1 Show your work‚ please. Assignment is due in class: For Tuesday Daytime and Evening Sections on May 28th‚ 2013 For Wednesday Daytime Section on May 29th‚ 2013 I need only one write-up back from each group with the first‚ last name‚ and your student ID numbers of students forming the group. To eliminate free riding‚ please put names of only those students in the group who actually worked and contributed to the group assignment. Those who have not contributed
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exactly the same as 12.21 Historically‚ most Eurobonds have been ________ denominated. a. U.S. dollar b. yen c. euro d. pound 12.25 Debt denominated in a foreign currency that is launched‚ priced and traded in Asia is referred to as a _________ bond. a. shogun b. samurai c. Asian-tiger d. dragon 12.26 Which one of the following factors does NOT promote well-functioning financial markets? a. secure property rights b. high tariffs c.
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2‚ 3‚ 4‚ 7‚ 12‚ & 25 1. Bond Yields. A 30-year Treasury bond is issued with face value of $1‚000‚ paying interest of $60 per year. If market yields increase shortly after the T-bond is issued‚ what happens to the bond’s a. coupon rate? The fixed rate is 6% and will not change the $60 per year. b. price? Price is dependent upon the market interest rate. If the market interest rate goes up‚ the bond price goes down; if the interest rate goes down‚ the price of the bond must increase. c. yield
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following is a form of bond issue wherein interest payments are made directly to the owners of record? A. coupon B. street name C. bearer D. registered E. secured 6. A real rate of return has been adjusted for: A. market risk. B. taxes. C. interest rate risk. D. inflation. 8. The 7 percent semiannual coupon bonds of the Garden Supplies Co. are selling for $976‚ have a face value of $1‚000‚ and have a yield to maturity of 8.079 percent. How many years will it be until these bonds mature? A. 5.00
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Case 72 Swan-Davis‚ Inc. Bond and Stock Valuation Swan-Davis‚ Inc. (SDI) manufactures equipment for sale to large contractors. The company was founded in 1976 by Tom Stone‚ the current chairman‚ and it went public in 1980 at $1 per share. The stock currently sells for $15‚ Stone owns 14 percent of the shares‚ and other officers and directors control another 13 percent. The industry is cyclical‚ and competition is strong‚ so profits are some-what unstable. Tables 1‚ 2‚ and 3 provide historical
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stocks bonds – Derivatives Prof. Lasse H. Pedersen Use of Financial Instruments Allocation of Capital – Financing of projects Consumption Smoothing: – saving and borrowing Allocation of Risk – Diversification – Hedging – Insurance Meeting place for investors with different (not necessary opposite) investment needs Prof. Lasse H. Pedersen Important Financial Assets Fixed Income Securities – ‘Borrowing instruments’ – Treasury bonds – Municipal bonds – Corporate bonds Equity
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different classes with different maturities and risks). risk and return are the most important characteristics of financial assets. Another is tax. (high tax-bracket investors would‚ other things equal‚ would prefer tax-exempt securities [municipal bonds]). brokered markets (when a bank seeks out investors to purchase an issue directly from the issuing firm‚ it is acting as a broker) and dealer markets (when an inv. bank purchased and sold a security issue‚ it is acting as a dealer – profit is the
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Topic 8 Retirement Planning 1. Defined benefit pension plans- determines benefit at retirement. The amount that an employer is supposed to give a yr in order to give what is promised is unknown. It aint my fault. 2. Defined contribution plans- the employee contributes a certain percentage for their retirement. You nigga! • Advantages: you see the exact balance at all times‚ easy to move accounts Retirement Ages • Normal retirement age – earliest age you can retire and receive full benefits
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Problem Set 3 - FINA 4200 Spring 2013 Due Wednesday February 26th before class I. Multiple Choices Chapter 2 1. According to the Capital Asset Pricing Model‚ investors are primarily concerned with portfolio risk‚ not the isolated risks of individual stocks. Thus‚ the relevant risk is an individual stock’s contribution to the overall riskiness of the portfolio. a. True b. False 2. Diversifiable risk‚ which is measured by beta‚ can be lowered by adding more stocks to a portfolio.
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Market Value of Stock / Earnings Per Share = P/E Ratio c) (Reported assets – Liabilities) / Outstanding Shares = Book Value per Share 4. a) (Purchase price) * ( % corporate bond pays) = Annual Dollar Amount Interest b) Annual Dollar Amount of Interest / (% comparable bonds are paying) = Approximate Value c) Hint: If you bought something that has now gone up in price relatively‚ it has increased in value. 5. a) (Amount invested – commission ) / price per
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