Inventory Pileup, Uneasy Shoppers Put Retailers in Jeopardy Chains have a glut of goods heading into big sales period just as some shoppers are pulling back By Sarah Naseaner F and Sharon Tertep Aug 20, 2022 ess ant For retailers, it is a season of discontent. From Walmart Inc. to Nordstrom Inc., retailers have a glut of inventory and are discounting items to clear out space for holiday goods. Many have already lowered profit expectations for the year and are working to cut costs as consumers are pulling back spending in categories such as apparel and home goods ahead of the key year-end shopping season. Move on to the next slide. Considering the article in the previous slide, which of the following statements are most likely to be incorrect? Answer: [ ] ] a. Without cost-cutting, profitability is expected to worsen towards the year-end b. Retailers are currently experiencing a low inventory turnover c. A glut of goods may help improve net working capital and cash flow d. Lower profitability decreases return on equity and earnings per share Weiland Co. shows the following information on its 2021 income statement: - sales =$100; - costs = \$70; - other expenses = $5; - depreciation expense =$3; - interest expense =$2; - taxes at 10% - dividends =$2. In addition, you're told that the firm issued $20 in new equity during 2021 and redeemed $40 in outstanding long-term debt. What is the 2021 operating cash flow? Answer: [ Please choose the appropriate term for the following. - So long as any Bonds are Outstanding, the Bond Issuer shall not: - (a) except as expressly permitted by this Bond Indenture, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Bond Issuer, including those included in the Collateral, unless directed to do so by the Bond Trustee in accordance with Article V; - (b) claim any credit on, or make any deduction from the principal or interest payable in respect of, the Bonds (other than amounts properly withheld from such payments under the Code) or assert any claim against any present or former Bondholder by reason of the payment of the taxes levied or assessed upon any part of the Collateral; Answer [ ] A. Indenture B. Covenant C. Credit ratings D. Call option Please check the box of the right answer. a. Bond price is inversely related to the market discount rate. When the market discount rate increases, the bond price decreases: True [ ], False [ ] b. For the same coupon rate and time-to-maturity, the percentage price change is greater (in absolute value, meaning without regard to the sign of the change) when the market discount rate goes up than when it goes down: True [ ], False [ ] c. For the same time-to-maturity, a lower-coupon bond has a greater percentage price change than a higher-coupon bond when their market discount rates change by the same amount: True [ ], False [ ] d. Generally, for the same coupon rate, a shorter-term bond has a greater percentage price change than a longer-term bond when their discount rates change by the same amount: True [ ], False [ ] Relative to Bond C, for a 200 bp increase in the required rate of return, Bond B will most likely exhibit a(n): Answer: A. equal percentage price change. B. greater percentage price change. C. smaller percentage price change. 6-2. Which bond will most likely experience the smallest percentage change in price if the market discount rates for all three bonds increase by 100 bps? Answer: Interest-rate forecasts from Federal Reserve officials sparked a mixed reaction from U.S. bond markets Wednesday, suggesting that investors still have questions on how much the central bank will actually tighten monetary policy. Selling in short-term Treasuries indicated that investors were once again lifting their expectations for how high interest rates could rise this year. Initial selling in longerterm bonds quickly fizzled, however, in a sign that investors thought that a fast pace of interest-rate increases over the next several months could lead to fewer increases later. Investors and economists pay close attention to Treasury yields because they set a floor on borrowing costs across the economy and are an important input in financial models that investors use to value stocks and other assets. Move on to the next slide. From 'Selling in short-term Treasuries indicated that investors were once again lifting their expectations for how high interest rates could rise this year', a. current yields of the short-term Treasuries are likely to increase: True [ ], False [ ] b. yield curve of the short-term Treasuries are moving upwards: True [ ], False [ ] From 'Treasury yields set a floor on borrowing costs across the economy and are an important input in financial models that investors use to value stocks and other assets.' a. higher Treasury yields help increase the value of stocks: True [ ], False [ ] b. Dividend Discount Mode is not affected by the yields: True [ ], False [ ] Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 2 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $2 per share 3 years from today and will increase the dividend by 5 percent per year thereafter. If the required return on this stock is 6 percent, what is the value of the stock? Answer: [ Please check the appropriate box: If the stock is currently traded at $150, according to the valuation above, the stock is abuyasell[[]] Joon-won is trying to solve the following question using the Excel. Please check it out and correct anything wrong for the right answer. Parkway Void Co. issued 20-year bonds two years ago at a coupon rate of 5.4 percent. The bonds make quarterly payments. If these bonds currently sell for 106 percent of par value, what is the YTM and EAR? Double click the below and open it. Please choose the incorrect statement in the below. Answer: [ A. Gordon Growth Model assumes that dividend growth rate is forever and never changes B. Gordon Growth Model requires the required rate of return to be constant over time C. Gordon Growth Model is flexible enough to take into account projected changes in the rate of future dividend growth D. Gordon Growth Model is easily performed using readily available or easily estimated inputs