Valuation of Financial Assets
Assuming a bond’s stated rate is 8% and the yield to maturity is 6%, will the bonds sell for par value, above par value or below par value?
Above Par Value
TRUE OR FALSE
Net present value is the preferred investment selection method because it does not consider all cash inflows and outflows associated with an investment.
FALSE
TRUE OR FALSE
In the maturity stage, a firm pays out all earnings in dividends.
FALSE
TRUE OR FALSE:
A reverse stock split means the company exchanges fewer new shares in place of older shares.
TRUE
A top shareholder advisory group this week recommended that Apple investors vote against Tim Cook’s pay and bonuses package. How much was the package worth?
A. $1.5bn B. $99mn C.$90mn
B. $99mn
If the required rate of return increases as a result of inflation or increased risk, the growth rate of common stock will_______
not change
What does the value K represent?
The after-tax cost of each source of capital to the firm
In which phase of the life cycle would one most likely encounter stock dividends?
Phase II and Phase III
When a tobacco firm merges with a steel company, it would be called
A conglomerate merger
Russia's Kamila Valieva was allowed to continue competing in the Beijing Winter Olympics while appealing a positive drug test result. What sport does she compete in?
A. Figure Skating B. Skiing C. Speed Skating
A. Figure Skating
What is the formula used to determine the required rate of return given a constant growth rate?
(D1/P0)+g
What is the firm’s required rate of return in the capital budget decision?
weighted average cost of capital
At what payout percentage is a stock dividend typically considered a stock split, in accordance with the recommendation of the Financial Accounting Standards Board?
25%
A business combination of two or more companies in which the resulting firm maintains the identity of the acquiring company is defined as a
merger
Volatility in US Treasuries this week hit its highest point since when?
A. November 2021 B. March 2020 C.April 1994
B. March 2020
Common stock has a dividend of $2.00 at the end of the first year, a growth rate of 6%, and a required rate of return of 8%. What is the price of the common stock?
100
What are the steps in a good capital budgeting program decision making process?
1. Search for and discovery of investment opportunities; 2. Collection of data; 3. Evaluation and decision making; 4. Reevaluation and adjustment
The Celluloid Collar Corporation has $210,000 in tax loss carryforwards. The Bowstring Shirt Company, a firm in the 21% tax bracket, would be willing to pay (on a non-discounted basis) the sum of ______________ for Celluloid Collar Corporation’s carryforward alone.
44,100
The stockholders' equity section of the balance sheet of the XYZ Corp. is as follows:
Common stock ($6 par) $ 24,000,000
Retained earnings $ 125,000,000
Total $ 149,000,000
If the company now splits its stock 3-for-1, how much will the par value per share decline?
2.00
In 2021, which company in the Philippines has an approximately $570 million profit, making it the largest company during the year?
A. SM Investments B. Shopee C. BDO Unibank
C. BDO Unibank
The price of a $500,000, 10 year bond, with a stated rate of 10% compounding semi-anually, and a yield to maturity of 12% is how much?
442,650.39 or 442,650
What is the formula for total market value?
TMV= Shares X (Price-Earnings Ratio X Earnings per Share)
CBA Inc. has 400,000 shares outstanding with a $5 par value. The shares were issued for $12. The stock is currently selling for $34. CBA has $5,000,000 in retained earnings and has declared a stock dividend that will increase the number of outstanding shares by 6%. What will be the "common stock" account after the stock dividend?
2,120,000
Firm X has declared a stock dividend that pays one share of stock for every five shares owned. After the stock dividend, earnings per share will
Decline 20%
TRUE OR FALSE
Cryptocurrencies and blockchain are the same thing.
FALSE
Blockchain is a type of digital ledger. A digital ledger records transaction information and then duplicates and distributes the information across the entire network of computer systems on that ledger. A cryptocurrency, on the other hand, is a digital asset that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.