Course | Financial Management | Test | Week 5 Midterm Exam Part 2 | Started | 5/9/16 9:47 PM | Submitted | 5/9/16 11:36 PM | Due Date | 5/10/16 6:00 PM | Status | Completed | Attempt Score | 44 out of 50 points | Time Elapsed | 1 hour, 49 minutes out of 3 hours | Instructions | This exam consist of 25 multiple choice questions and covers the material in Chapters 4 through 7. | Results Displayed | Submitted Answers, Correct Answers, Feedback | * Question 1 2 out of 2 points
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(5-1) Definitions a) Bond – is a long term contract under which the borrower agrees to make payments of interest and principal, on specific dates, to the holders of the bond. Treasury bonds – sometimes referred to as government bonds, are issued by the U.S. federal government. These bonds have not default risk. However, these bonds decline when interest rates rise, so they are not free of all risk Corporate bonds – issued by corporate; exposed to default risk – if the issuing company
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Eksamen 2009 FAKTA! 10) Explain why the yield to maturity on a convertible bond is lower than the yield to maturity on an otherwise Identical bond without the conversion feature. 10) The option to convert the bond into stock is valuable and hence its price will be higher and therefore its yield lower. 11) What is the meaning of the relationship rWACC=rU = rA, under perfect capital market assumptions? Please explain 11) With perfect capital markets, a firm s WACC is independent of its
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forecasted dividend payout ratio? (a) 40.61% (b) 42.75% (c) 45.00% (d) 47.37% (e) 49.74% (Points : 10) | Question 2.2. (TCO F) Chocolate Factory's convertible debentures were issued at their $1,000 par value in 2009. At any time prior to maturity on February 1, 2029, a debenture holder can exchange a bond for 25 shares of common stock. What is the conversion price, Pc? (a) $40.00 (b) $42.00 (c) $44.10 (d) $46.31 (e) $48.62 (Points : 10) | Question
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Barclays CoCos 1 What is a Contingent capital bond and how do they work? A Contingent capital bond, also known as contingent convertibles, is a contingent capital investment, which, according to the article, is a “relatively new form of capital conceptualized in the wake of the crisis.”1 According to the frequently asked questions on the issue, “contingent capital securities are hybrid securities issued by financial institutions that are intended to provide leverage in good economic times
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and debentures/convertible debentures. To finance their forecasts, MCI will begin by selling $481 million in common stock in 1984 the same way it did in the past. The share price is currently $47 per share and MCI needs to capitalize on the high value while it can. From 1985 to 1989, MCI will sell convertible debentures. A Convertible debenture is a type of loan issued by a company that can be converted into stock by the holder and, under certain circumstances, the issuer of the bond. The debentures
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including stock options and warrants, the effective yield test, and the two types of EPS. There is difficulty in determining what constitutes common stock. According to Thomas Jeffery Hogan and R. David Mautz, Jr., “Common stock equivalents are convertible securities that derive a major portion of their value from the fact that they can be exchanged for common stock” (Hogan and Mautz, Jr., 1991, p. 50). Also once a security I deemed to be a common stock equivalent, it always will be. The reverse
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“The Red Convertible” The Winnipeg Trip by April Herald As explained in the story “The Red Convertible” the set of brothers are Indians living on a reservation and this in itself is an experience that most people in America would not have been subjected to. The brothers have bonded from the way of life that is their existence; Henry is the older of the two and Lyman looks up to him. While taking a trip to Winnipeg, the event displays the similar attitudes of their free spirited natures and the
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for a period in excess of a year. Long term note payable; mortgage (b) What is a bond? * A bond is a form of debt Question 8: Contrast these types of bonds: (a) Secured and unsecured. * A secured bond has a claim on something (revenue or property) unsecured has no claim and is just the credit of the person repaying. (b) Convertible and callable. * Convertible means that the bond can be exchanged for common stock. * Callable means it can be taken by the person
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provision that permits the bond issuer to retire the obligation prior to its maturity. d. Sinking fund - a method of providing for the gradual retirement of a bond issue. The sinking fund requirement can be met by depositing a certain amount of money annually in a sinking fund account. Alternatively, the firm can either purchase a portion of the debt each year in the open market or, if the debt is callable, use a lottery technique to determine which actual bonds will be called and retired
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