FENG2016CMEEXAMOLDTUD2013till2016
FENG2016CMEEXAMOLDTUD2013till2016
FENG2016CMEEXAMOLDTUD2013till2016
Kartei Details
| Karten | 462 |
|---|---|
| Sprache | English |
| Kategorie | Finanzen |
| Stufe | Universität |
| Erstellt / Aktualisiert | 11.09.2016 / 28.10.2016 |
| Weblink |
https://card2brain.ch/box/financialengineering2016
|
| Einbinden |
<iframe src="https://card2brain.ch/box/financialengineering2016/embed" width="780" height="150" scrolling="no" frameborder="0"></iframe>
|
Lernkarteien erstellen oder kopieren
Mit einem Upgrade kannst du unlimitiert Lernkarteien erstellen oder kopieren und viele Zusatzfunktionen mehr nutzen.
Melde dich an, um alle Karten zu sehen.
If an oil well allows the investor the option to drill later, what must happen for
the option to be exercised?
The interest rate on one-year risk-free bond is 5%. BAC company has issued a
5% coupon bond with a face value of $1,000, maturing in one year. If the bond is
considered risk-free, what is the price of the bond?
A. $1,050
B. $1,000
C. $985
D. none of the above
Answer B:
Price = 1,050/1.05 = 1,000
If the discount rate on the bond is 5%, the expected payment in year-1 is
$952.50; calculate the price of the bond:
A. $1050
B. $985
C. $907.14
D. none of the given answers
Answer C:
PV = 952.50/(1.05) = 907,14
Beaver, McNichols and Rhie have developed the following model to predict the
chance of failing during the next year relative to chance of not failing for firms:
log(relative chance of failure) = -6.445 - 1.192 ROA + 2.307 (liabilities/assets) -
0.346(EBITDA/liabilities) using:
Banks concerned about risk of loss, may measure Value-at-Risk over what time
period?
A "foreign" bond is a bond:
Recently a high proportion of international bond issues are denominated in
A type of bond that has the advantage of secrecy of ownership, but has the
disadvantage of ownership not recorded by the registrar is:
The Alfa Co. has a 6% coupon bond $1.000 outstanding that pays annual
interest. Calculate the annual interest payment
Which of the following bonds is typically secured?
Firms often bundle up a group of assets and then sell the cash flows from these
assets in the form of securities. They are called
A 5% debenture (face value = $1000) pays interest on June 30 and December 31.
It is callable at a price of 105% together with accrued interest. Suppose the
company decides to call the bonds on September 30. What price must it pay for
each bond?
A. $1000.00
B. $1037.50
C. $1062.50
D. $1050.00
Answer C:
1050 + ((25)(90)/180) = $1062.50
The holder of a $1,000 face value bond can be exchanged any time for 25
shares of stock.
Then the conversion price is:
A. $40
B. $25
C. $100
D. None of the above
Answer A:
Conversion price = 1000/25 = $40
The holders of ZZZ Corporation's bond with a face value of $1,000 can
exchange that bond for 35 shares of stock. The stock is selling for $25.00.
What is the conversion value of the bond?
A. $1,000
B. $875
C. $1,200
D. None of the above
Answer B:
Conversion value = 35 * 25 = $875
LYONs are bonds that are:
I) Callable
II) Puttable
III) Convertible
IV) Zero-coupon
A. I and II only
B. I, II and III
C. I, II, III and IV
D. II, III and IV
Answer C:
A zero coupon bond that is callable (by issuer), putable (by investor), and
convertible
A firm's investment decision is also called the:
Mr. Dell has $100 income this year and zero income next year. The market interest rate is 10%
per year. Mr. Dell also has an investment opportunity in which he can invest $50 this year and
receive $80 next year. Suppose Mr. Dell consumes $50 this year and invests in the project. What is
the NPV of the investment opportunity?
A. $5
B. $22.73
C. $0 (zero)
D. None of the above.
B. $22.73
NPV = (80/1.1) - 50 = + 22.73
An initial investment of $500 produces a cash flow $550 one year from today. Calculate the rate
of return on the project
A. 10%
B. 15%
C. 25%
D. none of the above
A. 10%
Rate of return = (550 - 500)/500 = 10%
What is the present value of $10,000 per year perpetuity at an interest rate of 10%?
A. $10,000
B. $100,000
C. $200,000
D. None of the above
B. $100,000
PV = (10,000/0.1) = 100,000
After retirement, you expect to live for 25 years. You would like to have $75,000 income each
year. How much should you have saved in the retirement to receive this income, if the interest is
9% per year (assume that the payments start on the day of retirement)?
A. $736,693.47
B. $802,995.88
C. $2,043,750
D. None of the above
B. $802,995.88
PV = [[(1/0.09) - (1/((0.09)(1.09^25)))] * 75,000] * (1.09) = 802,995.88
Remark from Chris:
\(x = 1.09 *[{75,000 \over 0.09}-{75,000 \over (0.09)(1.09^{25})}]\)
Zie page 27: aftrekken van twee perpetuities met een 25-jaar discount factor. Kan je afleiden!
In class gedaan op het boord.
Op de eerste dag van retirement heb je 1 periode meer nodig, dus annuiteit maal 1,09
Which of the following statements about the relationship between interest rates and bond prices
is true?
What forward rate is embedded in a two year zero coupon bonds with a yield to maturity of 6%
and a three year zero coupon bond and a yield to maturity of 6.5%? Assume both bonds are
currently priced at par.
A. 5.50%
B. 6.00%
C. 6.50%
D. 7.50%
D. 7.50%
First calculate the future value of $1 at each YTM. You get 1.1236 for the 2 year bond and 1.2079
for the 3 year bond. Now determine the IRR over between years 2 and 3.
1.06^2 = 1.1236
1.065^3 = 1.2079
IRR= 1.2079/1.1236 = 7,5%
Super Computer Company's stock is selling for $100 per share today. It is expected that this
stock will pay a dividend of 6 dollars per share, and then be sold for $114 per share at the end of
one year. Calculate the expected rate of return for the shareholders.
A. 20%
B. 15%
C. 10%
D. 25
A. 20%
r = (114 + 6 - 100)/100 = 20%
The expected rate of return or the cost of equity capital is estimated as follows:
If the net present value (NPV) of project A is + $100, and that of project B is + $60, then the
net present value of the combined project is:
Music Company is considering investing in a new project. The project will need an initial
investment of $2,400,000 and will generate $1,200,000 (after-tax) cash flows for three years.
Calculate the NPV for the project if the cost of capital is 15%.
A. $169, 935
B. $1,200,000
C. $339,870
D. $125,846
C. $339,870
NPV = -2,400,000 + [(1,200,000)/(1.15)] + [(1,200,000/(1.15)^2] + [1,200,000/(1.15)^3] =
339,1870
When a firm has the opportunity to add a project that will utilize excess factory capacity (that is
currently not being used), which costs should be used to determine if the added project should be
undertaken?
If the discount rate is stated in nominal terms, then in order to calculate the NPV in a consistent
manner requires that project:
I) cash flows be estimated in nominal terms
II) cash flows be estimated in real terms
III) accounting income be used
Capital equipment costing $250,000 today has 50,000 salvage value at the end of 5 years. If the
straight line depreciation method is used, what is the book value of the equipment at the end of two
years?
A. $200,000
B. $170,000
C. $140,000
D. $50,000
B. $170,000
Annual depreciation = (250,000 - 50,000)/5 = 40,000
Book value at the end of two years = 250,000 - 80,000 = 170,000
Using the technique of equivalent annual cash flows and a discount rate of 7%, what is the value
of the following project?
0: -22
1: +8
2: +9
3: +11
4: +13
A. 3.06
B. 3.61
C. 10.25
D. 12.23
B. 3.61
NPV of the project is 12.23 and the EAA of the airplane is 3.61
NPV = -22 + (8/1,07^1) + (9/1,07^2) ...
EAA: (0,07*NPV)/(1-1,07^-4)
-
- 1 / 462
-
