Bond and Market Capitalization Rate

1. An American put discretion gives its confideer the fit to _________. A. buy the underlying asset at the exertion appraisement on or precedently the stolidity determination B. buy the underlying asset at the exertion appraisement singly at the stolidity determination C. dispose-of the underlying asset at the exertion appraisement on or precedently the stolidity determination D. dispose-of the underlying asset at the exertion appraisement singly at the stolidity determination 2. An American circumvent discretion gives the buyer the fit to _________. A. buy the underlying asset at the exertion appraisement on or precedently the stolidity determination B. buy the underlying asset at the exertion appraisement singly at the stolidity determination C. ell the underlying asset at the exertion appraisement on or precedently the stolidity determination D. dispose-of the underlying asset at the exertion appraisement singly at the stolidity determination 3. A European circumvent discretion gives the buyer the fit to _________. A. buy the underlying asset at the exertion appraisement on or precedently the stolidity determination B. buy the underlying asset at the exertion appraisement singly at the stolidity determination C. dispose-of the underlying asset at the exertion appraisement on or precedently the stolidity determination D. dispose-of the underlying asset at the exertion appraisement singly at the stolidity determination   4. You forfeiture one IBM July 120 circumvent curtail for a bribe of $5. You confide the discretion until the stolidity determination when IBM hoard dispose-ofs for $123 per portion-out. You mould accomplish a ______ on the bombardment. A. $200 profit B. $200 loss C. $300 profit D. $300 loss 5. At curtail manliness, the prize of a circumvent discretion is ___________ where X resemblings the discretion's drive appraisement and ST is the hoard appraisement at curtail stolidity. A. Max(0, ST - X) B. Min(0, ST - X) C. Max(0, X - ST) D. Min(0, X - ST)   1 1. C 2. A 3. B 4. B 5.   A Crave Circumvent Profit = Max[0,($123 - $120)(100)] - $500 = -$200   A steadfast that has an ROE of 12% is regarding exasperating its dividend payout. The hoardholders of the steadfast covet a dividend allow of 4% and a proud mould allow of 9%. Attached this notification which of the forthcoming declaration(s) is/are reform? I. All else resembling the steadfast's enlargement reprimand mould promote succeeding the payout modify II. All else resembling the steadfast's hoard appraisement mould go up succeeding the payout modify III. All else resembling the steadfast's P/E harmony mould enlargement succeeding the payout modify A. I singly. I and II singly. II and III singly. I, II, and III. 1. A steadfast cuts its dividend payout harmony. As a consequence, you comprehend that the steadfast's _______. A. produce on property mould enlargement B. rights discontent harmony mould enlargement C. rights enlargement reprimand mould decline. D. hoard appraisement mould decline 2. An underpriced hoard provides an look-fored produce which is ____________ the claimd produce domiciled on the proud asset pricing example (CAPM). A. hither than B. resembling to C. main than D. main than or resembling          3. Stockholders of Dog's R Us Pet Supply look-for a 12% reprimand of produce on their hoard. Management has acceptably been generating an ROE of 15% balance the developed 5 years but now treasures that ROE mould be 12% for the instant five years. Attached this, the steadfast's optimal dividend payout harmony is now ______. A. 0% B. 100% C. between 0% and 50% D. between 50% and 100%         4. The trustworthy enlargement dividend allowance example (DDM) can be used singly when the ___________. A. enlargement reprimand is hither than or resembling to the claimd produce. B. enlargement reprimand is main than or resembling to the claimd produce C. enlargement reprimand is hither than the claimd produce. D. enlargement reprimand is main than the claimd produce.         5. Suppose that in 2009 the look-fored dividends of the hoards in a indelicate traffic condemnation resemblinged $240 pet when the allowance reprimand was 8% and the look-fored enlargement reprimand of the dividends resemblinged 6%. Using the trustworthy enlargement constituteula for valuation, if concern reprimands enlargement to 9% the prize of the traffic mould modify by _____. A. -10% B. -20% C. -25% D. -33%        6. You are regarding acquiring a sordid portion-out of Sahali Shopping Center Corporation that you would love to confide for one year. You look-for to hold twain $1. 25 in dividends and $35 from the sale of the portion-out at the end of the year. The acme appraisement you would pay for a portion-out today is __________ if you wanted to merit a 12% produce. A. $31. 25. B. $32. 37 C. $38. 47 D. $41. 32        7. Eagle Brand Arrowheads has look-fored rights of $1. 5 per portion-out and a traffic proudization reprimand of 12%. Rights are look-fored to develop at 5% per year indefinitely. The steadfast has a 40% prepare end harmony. By how fur does the steadfast's ROE surpass the traffic proudization reprimand? A. 0. 5% B. 1. 0% C. 1. 5% D. 2. 0%        8. A preferred portion-out of Coquihalla Corporation mould pay a dividend of $8. 00 in the upcoming year, and sum year thereafter, i. e. , dividends are not look-fored to develop. You claim a produce of 7% on this hoard. Using the trustworthy enlargement DDM to count the inherent prize, a preferred portion-out of Coquihalla Corporation is trounce _________. A. $13. 50 B. $45. 50 C. $91. 0 D. $114. 29 10. 9. Brevik Builders has an look-fored ROE of 25%. Its dividend enlargement reprimand mould be __________ if it follows a plan of paying 30% of meriting in the constitute of dividends. A. 5. 0% B. 15. 0% C. 17. 5% D. 45. 0%        10. Cache Creek Manufacturing Gang is look-fored to pay a dividend of $3. 36 in the upcoming year. Dividends are look-fored to develop at 8% per year. The exposeoperating reprimand of produce is 4% and the look-fored produce on the traffic portfolio is 14%. Investors use the CAPM to appreciate the traffic proudization reprimand, and the trustworthy enlargement DDM to indicate the prize of the hoard. The hoard's exhibit appraisement is $84. 0. Using the trustworthy enlargement DDM, the traffic proudization reprimand is _________. A. 9% B. 12% C. 14% D. 18%           11. Ace Ventura, Inc. has look-fored rights of $5 per portion-out for instant year. The steadfast's ROE is 15% and its rights discontent harmony is 40%. If the steadfast's traffic proudization reprimand is 10%, what is the exhibit prize of its enlargement opportunities? A. $25 B. $50 C. $75 D. $100         12. Flanders, Inc. has look-fored rights of $4 per portion-out for instant year. The steadfast's ROE is 8% and its rights discontent harmony is 40%. If the steadfast's traffic proudization reprimand is 15%, what is the exhibit prize of its enlargement opportunities? A. -$6. 33 B. $0 C. $20. 34 D. $26. 67 14.         13. Cache Creek Manufacturing Gang is look-fored to pay a dividend of $4. 20 in the upcoming year. Dividends are look-fored to develop at a reprimand of 8% per year. The exposeoperating reprimand of produce is 4% and the look-fored produce on the traffic portfolio is 14%. Investors use the CAPM to appreciate the traffic proudization reprimand on the hoard, and the trustworthy enlargement DDM to indicate the inherent prize of the hoard. The hoard is trading in the traffic today at $84. 00.  Using the trustworthy enlargement DDM and the CAPM, the beta of the hoard is _________. A. 1. 4 B. 0. 9 C. 0. 8 D. 0. 5. 14. Westsyde Tool Gang is look-fored to pay a dividend of $2. 00 in the upcoming year. The expose-operating reprimand of produce is 6% and the look-fored produce on the traffic portfolio is 12%. Analysts look-for the appraisement of Westsyde Tool Gang portion-outs to be $29 a year from now. The beta of Westsyde Tool Company's hoard is 1.   Using a one-determination valuation example, the inherent prize of Westsyde Tool Gang hoard today is _________. A. $24. 29 B. $27. 39 C. $31. 13 D. $34. 52          15. Todd Mountain Development Corporation is look-fored to pay a dividend of $2. 50 in the upcoming year. Dividends are look-fored to develop at a reprimand of 8% per year. The expose-operating reprimand of produce is 5% and the look-fored produce on the traffic portfolio is 12%. The hoard of Todd Mountain Development Corporation has a beta of 0. 75. Using the CAPM, the produce you should claim on the hoard is _________. A. 7. 25% B. 10. 25% C. 14. 75% D. 21. 00%          16. Interior Airline is look-fored to pay a dividend of $3 in the upcoming year. Dividends are look-fored to develop at a reprimand of 10% per year. The expose-operating reprimand of produce is 4% and the look-fored produce on the traffic portfolio is 13%. The hoard of Interior Airline has a beta of 4. 00. Using the trustworthy enlargement DDM, the inherent prize of the hoard is _________. A. $10. 00 B. $22. 73 C. $27. 78 D. $41. 67           17. Everything resembling, which mutable is negatively cognate to the inherent prize of a gang? A. D1 B. D0 C. g D. k 19.          18. A sordid hoard pays an annual dividend per portion-out of $1. 80. The expose-operating reprimand is 5 percent and the expose bribe for this hoard is 4 percent. If the annual dividend is look-fored to stop at $1. 80 per portion-out, what is the prize of the hoard? A. $17. 78 B. $20. 00 C. $40. 00 D. None of the over           19. Hoard is appraisementd at $45 per portion-out. The hoard has rights per portion-out of $3. 00 and a traffic proudization reprimand of 14%. What is the hoard's PVGO? A. $23. 57 B. $15. 00 C. $19. 78 D. $21. 34          20. If a steadfast has a operating important progress resembling to $50 pet and that important progress is look-fored to develop at 3% forever, what is the sum steadfast prize attached a WACC of 9. 5%? A. $679 pet B. $715 pet C. $769 pet D. $803 pet          21. Instant year's rights are estimated to be $5. 00. The gang plans to replace 20% of its rights at 15%. If the require of equity is 9%, what is the exhibit prize of enlargement opportunities? A. $9. 09 B. $10. 10 C. $11. 11 D. $12. 21 1. A2. B3. C4. B5. C6. D7. B8. A9. D10. C11. B12. A13. A14. B15. B16. B17. A18. D19. B20. A21.              1. Consider two manacles, A and B. Twain manacles exhibitly are dispose-ofing at their par prize of $1,000. Each pay concern of $120 every-year. Manacle A mould grown in 5 years opportunity manacle B mould grown in 6 years. If the allows to manliness on the two manacles modify from 12% to 14%, _________. A. twain manacles mould enlargement in prize but manacle A mould enlargement past than manacle B B. twain manacles mould enlargement in prize but manacle B mould enlargement past than manacle A C. twain manacles mould curtail in prize but manacle A mould curtail past than manacle B D. twain manacles mould curtail in prize but manacle B mould curtail past than manacle A 2.          2. Everything else resemblings the __________ the manliness of a manacle and the __________ the coupon the main the sensitivity of the manacle's appraisement to concern reprimand modifys. A. craveer; excellent B. craveer; inferior C. insufficienter; excellent D. insufficienter; inferior         3. A __________ manacle is a manacle where the issuer has an discretion to depart the manacle precedently manliness at a local appraisement succeeding a local determination. A. circumventable B. coupon C. puttable D. shop 4. In an era of especially low-concern reprimands, which of the forthcoming manacles is most lovely to be circumvented? A. Zero-coupon manacles B. Coupon manacles dispose-ofing at a allowance C. Coupon manacles dispose-ofing at a bribe D. Floating reprimand manacles          5. A coupon manacle that pays concern of 4% every-year, has a par prize of $1,000, growns in 5 years, and is dispose-ofing today at $785. The explicit allow to manliness on this manacle is _________. A. 7. 2% B. 8. 8% C. 9. 1% D. 9. 6% 6. A coupon manacle that pays concern of $60 every-year, has a par prize of $1,000, growns in 5 years, and is dispose-ofing today at $75. 25 allowance from par prize. The exhibit allow on this manacle is _________. A. 6. 00% B. 6. 49% C. 6. 73% D. 7. 00% 7. A coupon manacle that pays concern semi-every-year has a par prize of $1,000, growns in 8 years, and has a allow to manliness of 6%. If the coupon reprimand is 7%, the inherent prize of the manacle today mould be __________ (to the undeviating dollar). A. $1,000 B. $1,063 C. $1,081 D. $1,100 8. A shop manacle due in one year has a allow of 6. 3% opportunity a shop manacle due in 5 years has a allow of 8. 8%. A manacle due in 5 years issued by Proud Country Marketing Corporation has a allow of 9. 6% opportunity a manacle due in one year issued by Proud Country Marketing Corporation has a allow of 6. 8%. The defect expose bribes on the one-year and 5-year manacles issued by Proud Country Marketing Corp. are respectively __________ and _________. A. 0. 4%, 0. 3% B. 0. 4%, 0. % C. 0. 5%, 0. 5% D. 0. 5%, 0. 8% 9. A naught-coupon manacle has a allow to manliness of 5% and a par prize of $1,000. If the manacle growns in 16 years, it should dispose-of for a appraisement of __________ today. A. $458. 00 B. $641. 00 C. $789. 00 D. $1,100. 00 10. You can be confident that a manacle mould dispose-of at a bribe to par when _________. A. its coupon reprimand is main than its allow to manliness B. its coupon reprimand is hither than its allow to manliness C. its coupon reprimand resembling to its allow to manliness D. its coupon reprimand is hither than its alteration prize 11. Consider a 7-year manacle behind a while a 9% coupon and a allow to manliness of 12%. If concern reprimands stop trustworthy, one year from now the appraisement of this manacle mould be _________. A. excellent B. inferior C. the same D. indeterminate 12. The allow to manliness on a manacle is ________. I. over the coupon reprimand when the manacle dispose-ofs at a allowance, and underneath the coupon reprimand when the manacle dispose-ofs at a bribe II. the allowance reprimand that mould set the exhibit prize of the reimbursements resembling to the manacle appraisement III. resembling to the penny amalgamation produce on bombardment singly if all concern reimbursements holdd are replaceed at the allow to manliness A. I singly B. II singly C. I and II singly D. I, II, and III 13.         13. Assuming semiannual amalgamationing, a 20-year naught-coupon manacle behind a while a par prize of $1,000 and a claimd produce of 12% would be appraisementd at _________. A. $97 B. $104 C. $364 D. $732 14.          14. The allow to manliness of a 10-year naught-coupon manacle, behind a while a par prize of $1,000 and a traffic appraisement of $625, is _____. A. 4. 8% B. 6. 1% C. 7. 7% D. 10. 4% 15.         15. If the repeat for a Shop manacle is listed in the newspaper as 98:09 bid, 98:13 ask, the explicit appraisement for you to forfeiture this manacle attached a $10,000 par prize is _____________. A. $9,828. 12 B. $9,809. 38 C. $9,840. 62 D. $9,813. 42 16.         16. The appraisement on a shop manacle is 104:21 behind a while a allow to manliness of 3. 5%. The appraisement on a near manliness corporeprimand manacle is 103:11 behind a while a allow to manliness of 4. 59%. What is the near percentage prize of the praise expose of the corporeprimand manacle? A. 1. 14% B. 3. 45% C. 4. 59% D. 8. 04% 17.              17. You buy an 8 year $1000 par prize manacle today that has a 6% allow and a 6% annual reimbursement coupon. In one year promised allows keep revived to 7%. Your one-year confideing determination produce was ___. A. 0. 61% B. -5. 39% C. 1. 28% D. -3. 25% 18. If the coupon reprimand on a manacle is 4. 50% and the manacle is dispose-ofing at a bribe, which of the forthcoming is the most lovely allow to manliness on the manacle? A. 4. 30% B. 4. 50% C. 5. 20% D. 5. 50% 19.              19. All other things resembling, which of the forthcoming has the craveest space? A. A 30 year manacle behind a while a 10% coupon B. A 20 year manacle behind a while a 9% coupon C. A 20 year manacle behind a while a 7% coupon D. A 10 year naught coupon manacle             20. All other things resembling, which of the forthcoming has the insufficientest space? A. A 30 year manacle behind a while a 10% coupon B. A 20 year manacle behind a while a 9% coupon C. A 20 year manacle behind a while a 7% coupon D. A 10 year naught coupon manacle             21. (Challenge endueigation) A pension important must pay out $1 pet instant year, $2 pet the forthcoming year, and then $3 pet the year succeeding that. If the allowance reprimand is 8% what is the space of this set of reimbursements? A. 2. 00 years B. 2. 15 years C. 2. 29 years D. 2. 53 years           22. All other things resembling, which of the forthcoming has the craveest space? A. A 20 year manacle behind a while a 10% coupon allowing 10% B. A 20 year manacle behind a while a 10% coupon allowing 11% C. A 20 year naught coupon manacle allowing 10% D. A 20 year naught coupon manacle allowing 11%           23. Because of propulsion, when concern reprimands modify the explicit manacle appraisement mould ____________ the manacle appraisement prognosticateed by space. A. frequently be excellent than B. rarely be excellent than C. frequently be inferior than D. rarely be inferior than            24. Space is a concept that is profitable in assessing a manacle's _________. A. praise expose B. liquidity expose C. appraisement contradiction D. propulsion expose 25. 25. A pension important has an mean space of its liabilities resembling to 15 years. The important is looking at 5-year manliness naught-coupon manacles and 4% allow perpetuities to immunize its concern reprimand expose. How fur of its portfolio should it arrange to the naught-coupon manacles to immunize if there are no other property importanting the plan? A. 52% B. 48% C. 33% D. 25%            26. You own a manacle that has a space of 6 years. Concern reprimands are exhibitly 7% but you treasure the Fed is about to enlargement concern reprimands by 25 reason points. Your prognosticateed appraisement modify on this manacle is ________. A. +1. 40% B. -1. 40% C. -2. 51% D. +2. 51%          27. A bank has an mean space of its liabilities resembling to 2 years. The bank's mean space of its property is 3. 5 years. The bank's traffic prize of equity is at expose if _______________________. A. concern reprimands decline B. praise opens decline C. concern reprimands rise D. the appraisement of all agricultural pay securities rises            28. Banks and other financial institutions can best conduct concern reprimand expose by _____________. A. maximizing the space of property and minimizing the space of liabilities B. minimizing the space of property and maximizing the space of liabilities C. matching the spaces of their property and liabilities D. matching the maturities of their property and liabilities             29. The space of a portfolio of manacles can be countd as _______________. A. the coupon weighted mean of the space of the personal manacles in the portfolio B. the allow weighted mean of the space of the personal manacles in the portfolio C. the prize-weighted an mean of the space of the personal manacles in the portfolio D. mean of the space of the craveest and insufficientest space manacles in the portfolio           30. Rank the concern sensitivity of the forthcoming from most easily-affected to an concern reprimand modify to the lowest easily-affected. I. 8% coupon, noncallable 20-year manliness, par manacle II. 9% coupon, exhibitly circumventable 20-year manliness, bribe manacle III. Zero-coupon, 30-year manliness manacle A. I, II, III B. II, III, I C. III, I, II D. III, II, I           31. A bank has $50 pet in property, $47 pet in liabilities, and $3 pet in portion-outholders' equity. If the space of its liabilities is 1. and the bank wants to immunize its net trounce athwart concern reprimand expose and thus set the space of equity resembling to naught, it should excellent property behind a while an mean space of _________. A. 1. 22 B. 1. 50 C. 1. 60 D. 2. 00 A manacle pays annual concern. Its coupon reprimand is 9%. Its prize at manliness is $1,000. It growns in indecent years. Its allow to manliness is exhibitly 6%.            32. The space of this manacle is _______ years. A. 2. 44 B. 3. 23 C. 3. 56 D. 4. 10            33. The qualified space of this manacle is ______ years. A. 4. 00 B. 3. 56 C. 3. 36 D. 3. 05            34. A manacle behind a while a 9-year space is trounce $1,080. 0 and its allow to manliness is 8%. If the allow to manliness declines to 7. 84%, you would prognosticate that the new prize of the manacle mould be _________. A. $1,035 B. $1,036 C. $1,094 D. $1,124                35. When concern reprimands enlargement, the space of a 20-year manacle dispose-ofing at a bribe _________. A. enlargements B. curtails C. stops the same D. enlargements at original then decline              36. Space facilitates the similarity of manacles behind a while differing ___________ A. defect expose B. alteration harmonys C. maturities D. allows to manliness          37. The literal allow open between the AA manacle and the AAA manacle has been 25 reason points. Currently, the open is singly 9 reason points. If you treasure the open mould before-crave produce to its literal levels you should ________________________. A. buy the AA and insufficient the AAA B. buy twain the AA and the AAA C. buy the AAA and insufficient the AA D. insufficient twain the AA and the AAA              38. The space of a manacle normally enlargements behind a while an enlargement in _________. I. engagement-to-maturity II. allow-to-maturity. III. coupon reprimand A. I singly B. I and II singly C. II and III singly D. I, II and III            39. Appreciate the qualified space of a 9% coupon, a 3-year corporeprimand manacle behind a while a allow to manliness of 12%. A. 2. 45 B. 2. 75 C. 2. 88 D. 3. 00          40. An 8%, a 30-year manacle has a allow-to-manliness of 10% and a qualified space of 8. 0 years. If the traffic allow drops by 15 reason points, there mould be a __________ in the manacle's appraisement. A. 1. 15% curtail B. 1. 20% enlargement C. 1. 53% enlargement D. 2. 43% curtail           41. To constitute a portfolio behind a while a space of 4 years using a 5-year naught-coupon manacle and a 3 year 8% annual coupon manacle behind a while a allow to manliness of 10%, one would keep to endue ________ of the portfolio prize in the naught-coupon manacle. A. 50% B. 55% C. 60% D. 75%              42. Which of the forthcoming set of provisions mould consequence in a manacle behind a while the first appraisement contradiction? A. A proud coupon and insufficient manliness. B. A proud coupon and crave manliness. C. A low coupon and insufficient manliness. D. A low coupon and crave manliness.           43. An endueor who look-fors cheap concern reprimands would maximize their proud mould by purchasing a manacle that has a ___ coupon and a ___ engagement to manliness. A. low; crave B. proud; insufficient C. proud; crave D. naught; crave             44. A naught-coupon manacle is dispose-ofing at a mysterious allowance appraisement of $430. 00. It growns in 13 years. If the allow to manliness of the manacle is 6. 7%, what is the space of the manacle? A. 6. 7 years B. 8. 0 years C. 10 years D. 13 years            45. Propulsion implies that space prognosticateions _______. I. undervalue the % enlargement in manacle appraisement when the allow declines II. undervalue the % curtail in manacle appraisement when the allow rises III. balanceestimates the % enlargement in manacle appraisement when the allow declines IV. balanceestimates the % curtail in manacle appraisement when the allow rises A. I and III singly B. II and IV singly C. I and IV singly D. II and III singly 1. D2. B3. A4. C5. D6. B7. B8. D9. A10. A11. A12. D13. A14. A15. C16. A17. A18. A19. A20. D21. C22. C23. A24. C25. A27. C28. C29. C30. C31. A32. C33. C34. C35. B36. C37. C38. A39. A40. B41. B42. D43. D44. D45. C