+ 95 6. The major difference between a calculator and a computer‚ when performing calculations‚ is that a A. calculator is slower and needs more human assistance. 7. Which of the following devices imparts ownership in a corporation? A. Bond B. Stock C. Savings account D. U.S. Treasury Bill 8. If you have earned income‚ which of the following retirement devices must you contribute to‚ by law? A. Vesting plan B. Pension plan C. Social security (FICA) D. IRA 9. What is the first
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Management of Financial Institution 1 . Define money market. What are its broad objectives and functions? How is money market different from capital markets? 2 . What is a derivative contract? Explain forward‚ future and options contracts. 3 . In every lending decision‚ credit officers refer to a principle of lending known as the 5 Cs of credit.< !--[if !support Lists]--> (a) <!--[end if]-->What is the relevance of this principle in a loan evaluation process?< !--[if !support Lists]--> (b)
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weakened US dollars fade the benefit of as the main resource supplier of China of Australia to expand .its economy. Nevertheless‚ the holders of US treasury bonds have to keep holding these securities to protect their value which cause the falling in the yield of treasury bonds. And Australia as a high credit rating and low debt country‚ its treasury bond may as an alternative choice for the investor. The down term of US economic caused the bankruptcy of companies in US‚ which caused the demand for import
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Chapter 14 Cost of Capital Multiple Choice Questions 1. A group of individuals got together and purchased all of the outstanding shares of common stock of DL Smith‚ Inc. What is the return that these individuals require on this investment called? A. dividend yield B. cost of equity C. capital gains yield D. cost of capital E. income return 2. Textile Mills borrows money at a rate of 13.5 percent. This interest rate is referred to as the: A. compound rate. B. current yield. C. cost of debt
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United States has five important financial instruments that yield returns. These financial instruments are the large company common stocks‚ small company common stocks‚ long term corporate bonds‚ long term U.S. Government bonds‚ and U.S. Treasury Bills (Ross et al‚ 2005). Stocks offer a higher rate of return than bonds or U.S. Treasury Bills. Investors can measure how much obtained on an investment by figuring out the holding period return‚ which is “is calculated as the sum of all income and capital
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613 Discount on Bonds Payable 37‚387 Bonds Payable 600‚000 (To record sale of bonds at discount B. Jul.1 Bond Interest Expense 28‚131 Discount on Bonds Payable 1‚131 Cash 27‚000 (To record payment of bond interest and amortization
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interest rates of different bonds with the same maturity. C) the relationship among the term to maturity of different bonds. D) the relationship among interest rates on bonds with different maturities. 2) The risk that interest payments will not be made‚ or that the face value of a bond is not repaid when a bond matures is A) interest rate risk. B) inflation risk. C) moral hazard. D) default risk. 3) Bonds with no default risk are
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Capital Markets and Investment Banking Process Capital Markets and Investment Banking Process The investment environment is vast and can be overwhelming if not entered into correctly. Firm’s issuing new securities to enhance revenues understand the complexities and risks involved when entering the primary market‚ and will employ investment bankers to mitigate those risks. Described throughout this paper is the investment banking process and portfolio construction‚ factors for selecting
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Long Term Liabilities – Bonds MULTIPLE CHOICE QUESTIONS EXERCISE 1. From the standpoint of the issuing company‚ a disadvantage of using bonds as a means of long-term financing is that a. bond interest is deductible for tax purposes. b. interest must be paid on a periodic basis regardless of earnings. c. income to stockholders may increase as a result of trading on the equity. d. the bondholders do not have voting rights. 2. If a corporation issued $3‚000‚000 in bonds which pay 5% annual interest
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Questions 1. The bond with a C rating should have a higher risk premium because it has a higher default risk‚ which reduces its demand and raises its interest rate relative to that on the Baa bond. 2. U.S. Treasury bills have lower default risk and more liquidity than negotiable CDs. Consequently‚ the demand for Treasury bills is higher‚ and they have a lower interest rate. 3. During business cycle booms‚ fewer corporations go bankrupt and there is less default risk on corporate bonds‚ which lowers
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