How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Rahul Jain Your Own Question

Rahul Jain
Rahul Jain, Tutor
Category: Homework
Satisfied Customers: 511
Experience:  BCOM(H), MBA, ACS
810777
Type Your Homework Question Here...
Rahul Jain is online now
A new question is answered every 9 seconds

Finance

Customer Question

1. Callable bond Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds? (Points: 1) A reduction in market interest rates. The company's bonds are downgraded. An increase in the call premium. Answers a and b are correct. Answers a, b, and c are correct.


2. Bond coupon rate All of the following may serve to reduce the coupon rate that would otherwise be required on a bond issued at par, except a (Points: 1) Sinking fund. Restrictive covenant. Call provision. Change in rating from Aa to Aaa. None of the answers above (all may reduce the required coupon rate).


3. Required return If the expected rate of return on a stock exceeds the required rate, (Points: 1) The stock is experiencing supernormal growth. The stock should be sold. The company is probably not trying to maximize price per share. The stock is a good buy. Dividends are not being declared.


4. Constant growth model A stock’s dividend is expected to grow at a constant rate of 5 percent a year. Which of the following statements is most correct? (Points: 1) The expected return on the stock is 5 percent a year. The stock’s dividend yield is 5 percent. The stock’s price one year from now is expected to be 5 percent higher. Statements a and c are correct. All of the statements above are correct.


5. The preemptive right is important to shareholders because it (Points: 1) Allows management to sell additional shares below the current market price. Protects the current shareholders against dilution of ownership interests. Is included in every corporate charter. Will result in higher dividends per share. The preemptive right is not important to shareholders.


6. Efficient markets hypothesis Which of the following statements is most correct? (Points: 2) An individual who has information about past stock prices should be able to profit from this information in a weak-form efficient market. Semistrong-form market efficiency means that stock prices reflect all public information. An individual who has inside information about a publicly traded company should be able to profit from this information in a strong-form efficient market. Statements a and c are correct. All the statements above are correct.


7. Preferred stock concepts Which of the following statements is most correct? (Points: 1) Preferred stockholders have priority over common stockholders. A big advantage of preferred stock is that preferred stock dividends are tax deductible for the issuing corporation. Most preferred stock is owned by corporations. Statements a and b are correct. Statements a and c are correct.


8. Common stock concepts Which of the following statements is most correct? (Points: 1) One of the advantages of financing with stock is that a greater proportion of stock in the capital structure can reduce the risk of a takeover bid. A firm with classified stock can pay different dividends to each class of shares. One of the advantages of financing with stock is that a firm’s debt ratio will decrease. Both statements b and c are correct. All of the statements above are correct.


9. Semistrong-form efficiency If the stock market is semistrong efficient, which of the following statements is most correct?


(Points: 2) All stocks should have the same expected returns; however, they may have different realized returns. In equilibrium, stocks and bonds should have the same expected returns. Investors can outperform the market if they have access to information which has not yet been publicly revealed. If the stock market has been performing strongly over the past several months, stock prices are more likely to decline than increase over the next several months. None of the statements above is correct.


10. Constant growth stock A share of common stock has just paid a dividend of $3.00. If the expected long-run growth rate for this stock is 5 percent, and if investors require an 11 percent rate of return, what is the price of the stock? Hint: P0 = D0(1 + g)/(rs-g) (Points: 2) $50.00 $50.50 $52.50 $53.00 $63.00


11. Preferred stock value The Jones Company has decided to undertake a large project. Consequently, there is a need for additional funds. The financial manager plans to issue preferred stock with a perpetual annual dividend of $5 per share and a par value of $30. If the required return on this stock is currently 20 percent, what should be the stock's market value? Hint: Vps = Dps/rps (Points: 2) $150 $100 $ 50 $ 25 $ 10


12. Sinking fund Which of the following statements is most correct? (Points: 1) Sinking fund provisions do not require companies to retire their debt; they only establish targets for the company to reduce its debt over time. Sinking fund provisions sometimes work to the detriment of bondholders – particularly if interest rates have declined over time. If interest rates have increased since the time a company issues bonds with a sinking fund provision, the company is more likely to retire the bonds by buying them back in the open market, as opposed to calling them in at the sinking fund call price. Statements a and b are correct. Statements b and c are correct.


13. Bond value - semiannual payment Assume that you wish to purchase a bond with a 30-year maturity, an annual coupon rate of 10 percent, a face value of $1,000, and semiannual interest payments. If you require a 9 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? Hint: VB = PMT((1- 1/(1+i)n)/i) + M (1/(1+i)n) (Points: 3) $905.35 $1,102.74 $1,103.19 $1,106.76 $1,149.63


14. Bond value - semiannual payment Assume that you wish to purchase a 20-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40. If you require a 10 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? Hint: VB = PMT((1- 1/(1+i)n)/i) + M (1/(1+i)n) (Points: 3) $619 $674 $761 $828 $902


15. Bond value - semiannual payment You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? Hint: VB = PMT((1- 1/(1+i)n)/i) + M (1/(1+i)n) (Points: 3) $ 826.31 $1,086.15 $ 957.50 $1,431.49 $1,124.62

Submitted: 8 years ago.
Category: Homework
Expert:  Rahul Jain replied 8 years ago.

1. Callable bond Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds?


(Points: 1) A reduction in market interest rates.



2. Bond coupon rate All of the following may serve to reduce the coupon rate that would otherwise be required on a bond issued at par, except a (Points: 1)


Call provision.



3. Required return If the expected rate of return on a stock exceeds the required rate, (Points: 1)


The stock is experiencing supernormal growth.



4. Constant growth model A stock’s dividend is expected to grow at a constant rate of 5 percent a year. Which of the following statements is most correct? (Points: 1)


The stock’s price one year from now is expected to be 5 percent higher.



5. The preemptive right is important to shareholders because it (Points: 1)


Protects the current shareholders against dilution of ownership interests.



6. Efficient markets hypothesis Which of the following statements is most correct? (Points: 2)


An individual who has information about past stock prices should be able to profit from this information in a weak-form efficient market.



7. Preferred stock concepts Which of the following statements is most correct? (Points: 1)


Preferred stockholders have priority over common stockholders.



8. Common stock concepts Which of the following statements is most correct? (Points: 1)


Both statements b and c are correct.


9. Semistrong-form efficiency If the stock market is semistrong efficient, which of the following statements is most correct?


Investors can outperform the market if they have access to information which has not yet been publicly revealed.



10. Constant growth stock A share of common stock has just paid a dividend of $3.00. If the expected long-run growth rate for this stock is 5 percent, and if investors require an 11 percent rate of return, what is the price of the stock? Hint: P0 = D0(1 + g)/(rs-g) (Points: 2) $50.00 $50.50 $52.50 $53.00 $63.00


$52.5


11. Preferred stock value The Jones Company has decided to undertake a large project. Consequently, there is a need for additional funds. The financial manager plans to issue preferred stock with a perpetual annual dividend of $5 per share and a par value of $30. If the required return on this stock is currently 20 percent, what should be the stock's market value? Hint: Vps = Dps/rps (Points: 2)


$ 25


12. Sinking fund Which of the following statements is most correct? (Points: 1)



Sinking fund provisions do not require companies to retire their debt; they only establish targets for the company to reduce its debt over time.



13. Bond value - semiannual payment Assume that you wish to purchase a bond with a 30-year maturity, an annual coupon rate of 10 percent, a face value of $1,000, and semiannual interest payments. If you require a 9 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? Hint: VB = PMT((1- 1/(1+i)n)/i) + M (1/(1+i)n) (Points: 3) $905.35 $1,102.74 $1,103.19 $1,106.76 $1,149.63


$1103.19



14. Bond value - semiannual payment Assume that you wish to purchase a 20-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40. If you require a 10 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? Hint: VB = PMT((1- 1/(1+i)n)/i) + M (1/(1+i)n) (Points: 3) $619 $674 $761 $828 $902


$828


15. Bond value - semiannual payment You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? Hint: VB = PMT((1- 1/(1+i)n)/i) + M (1/(1+i)n) (Points: 3) $ 826.31 $1,086.15 $ 957.50 $1,431.49 $1,124.62


$1124.62



Customer: replied 8 years ago.
Reply to Rahul Jain's Post: I closed this question before you responded. I am sorry that you wasted your time
Expert:  Rahul Jain replied 8 years ago.
THIS ANSWER IS LOCKED!
You can view this answer by clicking here to Register or Login and paying $3.
If you've already paid for this answer, simply Login.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
< Last | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin Kernersville, NC
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther Woodstock, NY
  • Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. Robin Elkton, Maryland
  • He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here. Diane Dallas, TX
 
 
 

Meet The Experts:

 
 
 
  • Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    4520
    More than 5000 online tutoring sessions.
< Last | Next >
  • http://ww2.justanswer.com/uploads/BU/BusinessTutor/2012-2-2_115741_Kouki2.64x64.jpg Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    4520
    More than 5000 online tutoring sessions.
  • http://ww2.justanswer.com/uploads/LI/lindaus/2012-6-10_04811_IMG20120609164157.64x64.jpg Linda_us's Avatar

    Linda_us

    Finance, Accounts & Homework Tutor

    Satisfied Customers:

    3121
    Post Graduate Diploma in Management (MBA)
  • http://ww2.justanswer.com/uploads/ComputersGuru/2010-02-13_051118_Photo41.JPG LogicPro's Avatar

    LogicPro

    Engineer

    Satisfied Customers:

    3035
    Expert in Java C++ C C# VB Javascript Design SQL HTML
  • http://ww2.justanswer.com/uploads/lanis/2009-4-1_233717_phput9xef_c1pm.jpg Lani S.'s Avatar

    Lani S.

    Tutor

    Satisfied Customers:

    2457
    Registered Nurse, Internet Researcher, Private Tutor
  • http://ww2.justanswer.com/uploads/chooser77/2009-08-18_162025_Chris.jpg Chris M.'s Avatar

    Chris M.

    M.S.W. Social Work

    Satisfied Customers:

    2341
    Master's Degree, strong math and writing skills, experience in one-on-one tutoring (college English)
  • http://ww2.justanswer.com/uploads/JawaadAhmed/2009-6-27_12137_SIs_SHadi.jpg F. Naz's Avatar

    F. Naz

    Chartered Accountant

    Satisfied Customers:

    1975
    Experience with chartered accountancy
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg Bizhelp's Avatar

    Bizhelp

    CPA

    Satisfied Customers:

    1873
    Bachelors Degree and CPA with Accounting work experience
 
 
 

Related Homework Questions