CORPORATE FINANCE $1$

Midterm Exam

Assoc. Prof. Dr$.$ Hakk$$zt$$rk

You have $250000TL$ to invest. The first option is to buy a government bond for a year. At the end of one year, you will have $325000TL$ net in your account. The second option is to invest in a corporate bond that has $1$ year maturity. The simple yield of this corporate bond is $\%38.$ The third alternative is to buy a common stock at the current price of $5\mathrm{.}60TL$ and the market forecasts a fundamental price of $8\mathrm{.}12$ TL per share for one year. Which option would you invest and why? If you construct a portfolio of $3$ assets mentioned above, that is investing $100000TL$ to government bond, $80000TL$ to corporate bond and the rest to common stock, calculate the expected rate of return of your portfolio.

You invest $202000$ TL for $182$ days. At the end of $182$ days, you have $220000$ TL net in your account. If the inflation for $182$ days realizes around $\%10,5,$ what is your real rate of return?

You invest $185000TL$ to a bank deposit account at gross rate of $\%42\mathrm{.}5$ for $56$ days. If the withholding tax rate is $\%5,$ how much would you have net in your account at the end of $56$ days.

A commercial paper is issued for $240$ days. The par value is $100000$ TL$.$ The risk free rate is $\%40$ and the risk premium is $\%8.$ Find the price of this commercial paper.

What are the factors that determine the value of a security? Explain briefly.