FINC 331 Week 4 and 5 Homework (UMUC)

BUY HERE: FINC 331 Week 4 and 5 Homework (UMUC) – Homeworkmade

FINC 331 Week 4 and 5 Homework (UMUC)

1. Which yield curve theory is based on the premises that financial instruments of different terms are not substitutable and therefore the supply and demand in the markets for short-term and long-term instruments is determined largely independently?
2. Which of the following statements regarding the relationship between economic factors and the nominal inflation rate is true?
3. Which of the following predictions based on a description of the yield curve is correct?
4. The terms of a bond allows its issuer to redeem the security at anytime. This type of bond is _____.
5. A company issues a bond with a coupon rate of 5%. Since the bond was issued, market interest rates have decreased. What effect will this decrease have on the bond’s market price and its current yield?
6. Which of the following describes a difference between stocks and bonds?
7. Which of the following are debt instruments that companies use as investments? Choose one answer.
8. Which of the following statements about the disadvantages of bonds as investments is correct?
9. Which of the following statements regarding the advantages of bonds as an investment, are true?
10. Which of the following statements about zero coupon bonds is NOT true?
11. Which of the following statements about floating rate bonds (FRBs) is NOT true?
12. Given an inflation rate of 4% and a real rate of 5%, what is the corresponding nominal rate?
13. A bond has a coupon rate of 7% and a yield to maturity rate of 8%. The bond is ____.
14. A bond grants its holder the option to sell the bond back to the issuer at a fixed price at a fixed date prior to the bond’s maturity. When evaluating the bond’s value, the company should calculate the bond’s _____.
15. Which of the following statements regarding the calculation and use of inflation premiums is true?
16. A zero-coupon bond has a face value of $1000 and a market value of $800. The bond will mature in 5 years. What is its yield to maturity?
17. A bond has a face value of $1000 and a contractual interest rate of 5%. The bond has quarterly interest payments. The market interest rate is 4%. The bond matures in 5 years and will pay $1000. What is the bond’s current market price?
18. An annuity has an interest rate of 7% and makes a quarterly payment of $2000. The annuity is to last for 5 years. What is the present value of the annuity.
19. Which of the following statements regarding a bond’s time to maturity is true?
20. Which of the following is NOT a class of credit ratings that a Nationally Recognized Statistical Rating Organization (NRSRO) can register to review?
21. When an issuing company goes bankrupt, the bondholders are always paid before which of the following the parties?

Week 5 Homework for Quiz 2

1. Which of the following features is generally NOT associated with preferred stock?
2. Which of the following is generally NOT a right granted to owners of preferred shares?
3. Which of the following statements about a preferred stockholder’s rights to the company’s income is NOT true?
4. A company goes bankrupt and its assets are to be divided between its shareholders and debtholders. Which of the following, from highest priority to lowest, is the correct order of how the company’s assets should be divided?
5. A company a constant growth rate of 3%. The company’s risk adjusted discount rate is 5%. The company has a $2 dividend. What is the per share value of the stock?
6. A company has cost of equity of 8% and a dividend growth rate of 3%. Its dividends for next year is $2.20 per share. What should the stock’s price be?
7. Which of the following statements regarding corporate valuation approaches is true?
8. An investment portfolio has a 30% chance of earning $125,000 in a year, a 40% chance of earning $50,000, a 15% chance of earning nothing and 15% chance of losing $20,000. What is its expected return?
9. A portfolio has $70,000 of bonds and $30,000 of stock. The bonds are 80% likely to have a 10% return and 20% likely to have a 0% return. The stock is 50% likely to have a 20% return and 50% likely to have a 10% loss. What is the expected return?
10. What factors should be considered when weighting an investment portfolio?
11. A company issues a bond with the provision that it may pay off the debt early. This bond is subject to which type of risk?
12. Using the Value at Risk methodology, an investment advisor says that she is 90% sure that her investment portfolio will not lose more than $250,000 in a given day. Based on that description, which of the following statements is true?
13. A portfolio has a 95% certainty that it won’t lose more than $50,000 in a given day. On the big loss days, there is a 30% chance the portfolio will lose $50,000 and a 70% chance it will lose $75,000. What is the portfolio’s expected shortfall?
14. A portfolio is composed of 30% stock, 20% bonds, and 50% mutual funds. The stock is expected to have a 10% return, the bonds a 5% return and the mutual funds a 7% return. What is the expected return of the portfolio?
15. A portfolio is composed of 80% stock and 20% bonds. The variance of stock is 170 and the variance of bonds is 140. The covariance is 30. What is the portfolio’s variance?