Question
1) Identify the correct expression for calculating the present value of an investment. a.Present value = Future value (1 + r)n b.Present value = Future
1) Identify the correct expression for calculating the present value of an investment.
a.Present value = Future value (1 + r)n
b.Present value = Future value + (1 + r)n
c.Present value = Future value - (1 + r)n
d.Present value = Future value / (1 + r)n
e.Present value = Future value / ((1 + r) n)
2) A change in market conditions causes the market price of a bond to change because of changes in the bond's:
a.coupon rate.
b.yield to call.
c.yield to maturity.
d.principal value.
e.maturity value.
3) Pelican Corporation is planning to invest $12,000 for the next 8 years. It will have to pay the amount at the beginning of each year. This form of payment is known as a(n) _____.
a.immediate annuity
b.annuity due
c.uneven cash flow stream
d.ordinary annuity
e.deferred annuity
4) Which of the following statements is true of a hostile takeover?
a.A hostile takeover results when a management wants the firm to be taken over.
b.A hostile takeover occurs when a firm's stock is undervalued relative to its potential.
c.A hostile takeover retains the managers of the acquired firm at their previous positions.
d.A hostile takeover refrains managers to take actions that maximize stock prices.
e.A hostile takeover results in poor management and inefficient operations.
5) The computation for the yield to call (YTC) is the same as that for the yield to maturity (YTM), except that we substitute the _____ of the bond for the maturity (par) value.
a.market price
b.face value
c.call price
d.principal value
e.issue price
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