Chapter 01 The Investment Environment Multiple Choice Questions 1. In 2007, ____________ was the most significant real asset of U.S. households in terms of total value. A. consumer durables B. automobiles C. real estate D. mutual fund shares E. bank loans See Table 1.1. Difficulty: Easy 2. In 2007, ____________ was the least significant financial asset of U.S. households in terms of total value. A. real estate B. mutual fund shares C. debt securities D. life insurance
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Price. In other words, subtracting from the stock price yields a negative change. Adding to the stock price yields a positive change. Task 3: Bond Evaluation 1. The Coupon rate is 6.93%. $ 75 + [(1000-1062)/20] [0.6*1062]+ [.4*1000] $75 + -3.1+71.9 =637.2+ 400 = 1037.2 .0069 0r 6.93% 2. A coupon rate is constant. Whereas the value of a bond will change and the interest rate will change as
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he following is excerpted (with some modifications) from former U.S. President George W. Bush's Address to the Nation on September 24, 2008:[2] Other additions are sourced later in the article or in the main article. The problems we are witnessing today developed over a long period of time. For more than a decade, a massive amount of money flowed into the United States from investors abroad. This large influx of money to U.S. banks and financial institutions — along with low interest rates — made
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payment period rd= effective interest rate per coupon payment period n = number of coupon payments remaining Market price of bonds = 1000*.08 * (1 - 1.09-12)/.09 + 1000*1.09-12 Market price of bonds = $928.39 5-2) Value of the bond formula = 1nPar value*Coupon rate1+YTMt+Par value1+YTMn Time to maturity = 12 Par value = $1,000 Coupon rate = 10% Price of the bond = $850 Yield to maturity =12.475% 5-6) r = r* + IP + MRP 6.3 = 3 + 3 + MRP 6.3 – 6 = MRP 0.3 = MRP 5-7) N = 16
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University of Washington version 2.0 School of Business April 2004 Walt Disney Company’s Sleeping Beauty Bonds – Duration Analysis* In July 1993, the Walt Disney Company issued $300,000,000 in senior debentures (bonds). The debentures carried an interest rate of 7.55%, payable semiannually, and were priced at “par”. They were due to be repaid on July 15, 2093, a full one hundred years after the date of issue. However, at the company’s option, the debentures could be repaid
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alike - derivative inequity This chapter is about what probably is the most traded instrument: equities. According to the author, Equity derivatives were the hottest financial instrument in the 90’s. Author quotes the situation as, “I came from a bond background where you put up your money, you know what interest you get, and at the end, you get your money back. With shares, the only similarity to this is that you put up the money. You have no guarantee that the company will pay dividends or how
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| Introductory Paper | Inside job documentary | | Mouna Jama Ali Osman | 10/19/2013 | | The movie "Inside Job" gives a deep look at the financial crisis as it discusses the reasons of the global financial crisis that has cost people's money, their houses and property and also their jobs. The movie begins with one of the most famous examples that affected by the crisis which is Iceland. Notably by their nature, picturesque view and a strong economy, Iceland began the deregulation
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instruments Debt instruments: • A paper or an electronic obligation that enables an issuer to raise funds by promising to repay a lender in accordance with terms of a contract. • Short-term, intermediate-term, long-term debt instruments • E.g.: bonds, notes, certificates,… Stock market: The market in which shares/equities are issued and traded either through exchanges or over-the-counter
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Week 6 Homework E16-1 (Issuance and Conversion of Bonds) 1 Cash 9,900,000 .99*10,000,000 Discount 100,000 Bonds Payable 10,000,000 Bonds 70,000 Cash 70,000 2 Expense 75,000 Bonds Payable 10,000,000 Discount Bonds 55,000 Common Stock 1,000,000 Paid in Capital Common Stock 8,945,000 10,000,000-1,000,000-55,000 Cash 75,000 E16-12 (Issuance, Exercise, and Termination of Stock Options) 1/1/11 no journal entry 12/31/11 Compensation
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1 Student: ___________________________________________________________________________ 1. The exchange of goods and services is made more efficient by: A. barters. B. money. C. governments. D. some combination of government transfer and barter. Short selling is: A. the sale of a financial product at a discount to its current market value. B. the sale of a financial product in small quantities. C. the sale of a financial product that the seller does not own. D. the sale of a financial product
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