1. Mezzanine level financing appears in which market? 2. Underwriters work in which market? Secondary 3. Bid / spread appears in which market? 4. Venture capital works in which market? 5. Designated Market Makers work in which market? 6. Syndicates appear in which market? 7.In a recent IPO, the sausage Co, offered 1.6 million shares of stock at an offer price of $16 a share. What is the expected proceeds from this deal? 8. If the deal in #7 had a Management Fee spread was 7.00%, what should be the expected proceeds? 9. What is a "best-efforts-deal" 10. If a "best-efforts-deal was agreed upon and only $20,079,868.00 was received by Sausage Co, how many shares were sold? 11. What is the Discount Yield on a Bankers acceptance, today, with a face value of $10.000.000 with a 130 days until maturity; that costs $9.980,800? 12. What is the price of the security in #11, 15 - from today? 13. A Treasury St a rity and a bank 12. What is the price of the security in #11, 15 days from today? 13. A Treasury bill has 21 days to maturity and a bank discount yield of 1.89 percent. What is the bond equivalent yield? 14. What is the abbreviation of the interest rate that international banks charge one another for overnight Eurodollar loans? 15. A pure discount security is an interest-bearing asset that pays an investor what? 16. The Treasury yield curve is a graph which plots Treasury yields against what? 17. Which theory states that the term structure of interest rates reveals the financial market's projections of future interest rates? 18. Southern Bank needs to borrow money overnight from the Federal Reverse in order to meet its reserve requirements. What interest rates will be charged on this loan? 19. Your credit card has an annual percentage rate of 18.9 percent and compounds interest daily. What is the effective annual rate? 20. If the 4-year Treasury Note is yielding 5.71% and the 5-year Treasury Note is yielding 5.63%, what is the 1-year Treasury yield 4 years from now? 21. An S&P 100.. . of 1.1 and has 21. An S&P 100 Company with a beta of 1.1 and has the following dividend/share history Year Dividend 2012 $1.60 2013 $1.75 2014 $1.85 2015 $2.05 2016 $2.20 2017 $2.40 What is Geometric Dividend Growth Rate? 22. In 2017, EPS = $4.00, the current Risk Free Rate = 2.0%, Net Income = $550,000, Total Liabilities = $3.8M and Total Assets = $5.2M, Current Stock price = $51.00, for the stock in #25. What is the firm's discount rate? And is the Dividend growth rate calculated in #25 sustainable and why? 23. Using the Dividend Discount Model, what is P? Would you purchase this security? 24. Suppose you are considering two possible investment opportunities, an 11-year treasury bond and a 6-year, A-rated corporate bond. The current real risk free rate of interest is 2%; the inflation is expected to be 2% for 2 years, 3% the following 4 years, and 4% thereafter. The maturity risk premium is estimated to be 0.03% for every year after year 1. The liquidity premium is estimated to be 0.3%. The yield spread between the securities is .84%. What yield would you predict for each of the two investments? 25. Asset Q has an expected return of 10% and a beta of 0.8. If the risk free rate is 2%. Illustrate the relationship between the portfolio's expected return and beta, by plowin d betas. What 25. Asset Q has an expected return of 10% and a beta of 0.8. If the risk free rate is 2%. Illustrate the relationship between the portfolio's expected return and beta, by plotting expected returns and betas. What is the slope of the line that results, and what does it mean? 26. Refer to the graph created in #25, illustrate the relationship for Asset Z, which has an expected return of 12% and a beta of.9; compared to Asset Q from #24; which is the superior investment? 27. What is the return for both Q and Z with a beta .8, from #26? 28. Which of the securities in #27 is overvalued? What will happen in the market to adjust for this? 29. Precision Engineering dividend is currently $2.55 per share and it recently announced that its next dividend will be increasing by 3% annually. What is the current value of the stock to you if you require a 10% rate of return? 30. If Precision Engineering price is currently 33.75, would you purchase the security? Why? 31. Home interiors has net income of $325,000. The firm pays out ten cents per share in dividends on 1 million shares. What is the firm's retention ratio? 32. Wilkinson and Sons has net income of $402,200, total assets of $3.00 million and total liabilities of 1.75 million. The company paid $205,000 in dividends. What is the firm's sustainable growth? 33. A bond with a face value of S1000 and a coupon 33. A bond with a face value of $1000 and a coupon of 6.25% is selling for S1043.36, what is the current yield? 34. You purchase the bond in #22 which has 20 years remaining until maturity, what is the YTM? 35. Exactly one year later you sell the bond from #33 after the yield has dropped by 50 basis points, what is the price you sold the bond at? What was the return over the past year? 36. If the bond you calculated the return for in #34 was a municipal bond and you were in the 38% tax bracket, how much in taxes would you pay? 37. You own a corporate bond that pays 7.5% Coupon.Coupon is distributed on 2/1/xx, and you sell it at par on 10/21/xx, what is the dirty price on the sale of the security? 38. If a Municipal Bond had a coupon of 5% and you were in the 35% tax bracket, what would be the Equivalent Taxable Yield? 39. Lion Co. bond is selling at 96, yielding 5.35%. If yields increase by 50bps, the price drops to 93. If yields decrease by 25bps, the price rises to 98.50. What is the duration for this bond for a 1 percentage point change? 40. Use the following table of States of the Economy and Stock Returns to answer the following questions. Security Returns if State occurs State of Economy Probability of State of Economy A Recession .30 -8% .40 .30 Average 13% Prosperity 23% 15% 1.0 A. Calculate the Expected Return for A & B B. Calculate the Standard Deviation for A & B C. Calculate the Expected Return on a portfolio of 50% Security A & 50% Security B D. Calculate the Standard Deviation for the portfolio A&B
