Professional Documents
Culture Documents
Grade Details
Points10 of 10
Received:
2. Question:(TCO D) Which one of the following statements is most correct?
Your a. If a bond''s yield to maturitiy exceeds its
Answer: annual coupon, then the bond will be trading at a
premium.
b. If interest rates increase, the reletive b. price
change of a 10-year coupon bond will be greater
than the relative price change of a 10-year zero
coupon bond.
c. If a coupon bond is selling at par, its current CORREC
yield equal its yield to maturity T
d. Both a and c are correct
e. None of the answers above is correct.
InstructorStatement c is correct; the other statements are false. If a bond’s YTM >
Explanation:annual coupon, then it will trade at a discount. If interest rates increase,
the 10-year zero coupon bond’s price change is greater than the 10-year
coupon bond’s.
Points10 of 10
Received:
3. Question:(TCO B) What's the future value of $1,500 after 5 years if the
appropriate interest rate is 12%, compounded monthly?
Your $1,922.11
Answer: CORREC
$2,725.05
T
$2,600.11
$2,230.66
$2,342.19
InstructorThis can be done with a calculator, table or excel.
Explanation:
$1,500 (1.8167) = $2,725.05
Points10 of 10
Received:
7. Question:(TCO A) Other things held constant, which of the following alternatives
would increase a company's cash flow for the current year?
Points4 of 10
Received:
8. Question:(TCO C) Which of the following statements is correct? (Assume that
the risk-free rate is a constant)
Points10 of 10
Received:
9. Question:(TCO C) JBS Inc. recently reported net income of $4,750 and
depreciation of $885. How much was its net cash flow, assuming it had
no amortization expense and sold none of its fixed assets?
Your $4,831.31
Answer:
$5,085.59
$5,353.25
CORREC
$5,635.00
T
$5,916.75
InstructorNet Income $4,750
Explanation:
Depreciation $ 885
Inflation
= 5.0%
premium
Liquidity
= 1.0%
premium
Maturity risk
= 2.0%
premium
Default risk
= 2.0%
premium