Finance questions and answers in December 2021

You are required to answer the following questions by showing relevant workings. a. Compute the value of a bond that matures in 20 years, makes an annual coupon payment of RM40, and has a par value of...
 . Question 2 a. "By investing in different securities. an investor can lower hisr'her exposure to risk". Do you agree with this statement? Use your own words and example to support your ans...
BAFB 1013 final Q2. September 2021 Final Examination CONFIDENTIAL Question 2 Puan Duka Lara is going to invest her RM15,000 funds in one of three projects with the following information: Project Hitam...
BAFB 1013 final Q4. Principles of Finance (BAFB1013) September 2021 Final Examination CONFIDENTIAL Question 4 You are required to answer the following questions by showing relevant workings. a. You ar...
   . Question 22 (2 points) Listen Speedy Service Inc. has an 8% coupon bond that matures in 11 years. The bond pays interest semi-annually. What is the market price of a $1,000 face value bond if t...
Hollow and Shout Inc. (H&S) manage a product with current sales of $1,000,000 per year. H&S are expecting sales to increase by 12 percent next year. What is the expected percentage change in t...
À l'occasion d'une rencontre avec votre conseiller financier au sujet de votre régime enregistré d'épargne-retraite (REER), celui-ci vous propose d'investir dans un certificat de placement à taux...
Bob Stevens has just inherited $175,838 which he would like to use as part of his retirement nest egg. He invested the funds at a 6.72 percent annual rate compounded annually. Bob will reach age sixty...
When a discounted cash flow (DCF) model is used to estimate the intrinsic value of a company, many decisions are made. What are two weaknesses of the DCF model? Provide two examples of an attribute, a...
Assume that the First National Bank has the balance sheet shown below, the income gap is currently -$17.5 million, and that interest rates are initially at 10%. First National Bank   Assets Duration ...
Problem 2: (18 points) You are an analyst at FixInc Corp. whose task is to value a convertible bond of Allana Corp. that matures in 5 years. The bond has face value of $1000, annual coupon rate of 8% ...
For an investment ending at time T we denote the net cash flow at time t by c t and the net rate of cashflow per unit time by ρ(t) . The present time is t = 0 and time is measured in years. An infras...
For an investment ending at time  T  we denote the net cash flow at time  t  by  c t  and the net rate of cashflow per unit time by  ρ(t) . The present time is  t = 0  and time is measured i...
Consider a stock whose current price is $150 per share. You would like to value an American put option on this stock that matures in two years. Assume that the strike price for this put option is $170...
Problem 4: (29 points) Consider a stock whose current price is $150 per share. You would like to value an American put option on this stock that matures in two years. Assume that the strike price for ...
Problem 1: (12 points) You are expecting XYZ stock price to go down in next 3 months, however you are not completely sure. So you decide to use just one option, either European call or European put o...
Consider a two-year European call option on a non-dividend-paying stock of XYZ Corp. Suppose that XYZ stock price is $50, the risk-free interest rate is 5% per annum with continuous compounding and th...
Suppose that the stock price of XYZ corp. follows stochastic I to process with a drift rate of 15% per annum and a standard deviation rate of 30% per annum. The current stock price of XYZ corp. is $50...
A stock price is currently $150. It is known that at the end of the year it will be either $220 or $80. The risk-free rate of interest with continuous compounding is 5% per annum. The current value of...
2. Based on your calculations in Tab 2, Question 8, which offer should LGI accept for the Bowie plant? Explain why. Be sure to include the concepts of risk and potential return as part of your discuss...
30. Closing costs on the purchase of a house... **increase the amount of cash available down payment **reduce amount cash available down payment **are paid by the lender   33. The tax advantages of h...
23. Consumer purchase decisions should be directly related to your **financial goals. **aspirational lifestyle. **future standard of living. **personal feelings   24. What is normally referred to as ...
HW #6   A. Assume an individual makes a lump sum investment at the beginning of year one of $1,317. The expected return on this investment is $8,872 (after tax) to be received as a single amount at t...
Acme Co. is considering a four-year project that will require an initial investment of $9,000. The base-case cash flows for this project are projected to be $12,000 per year. The best-case cash flows ...
An electric utility company is in a stock-for-stock negotiation with an acquirer. The buyer's and target's share prices are currently trading at $35 and $20, respectively. The buyer is projected to ea...
The price of IBA stock is $101. It will either increase by $10.2 or decrease by $8.5 at the end of month 1. If the price is up in the first month, it will either increase by $16.1 or decrease by $21 a...