Solve these questions clearly
4 Consider the following definition: The lender's security is a specified asset which the borrower cannot dispose of (without the lender's permission). The lender can repossess upon default or appoint a receiver to intercept income (eg rent).' This is a definition of a: Eurobond. warrant. fixed-charge debenture. floating-charge debenture. [2] .5 Which of the following is correct? Interest payments are always greater than dividend payments. Interest is paid out of pre-tax profit and dividends are paid out of post-tax profit. Interest is paid on debentures and dividends are paid on unsecured loan stock. Interest is taxable but dividends are not. [2] 6 Which of the following ranks lowest if a company is wound up? Eurobonds mortgage debentures floating-charge debentures preference shares [2] .7 A highly risk-averse investor should NOT invest in ordinary shares because: ordinary shares offer a low expected return relative to other securities. ordinary shareholders have the last entitlement in the event of a winding-up of the company. they offer a low initial yield. shareholders have pre-emptive rights. [2] 8 Under a floating charge: A the company may not, in the usual course of business, realise assets which are subject to the charge. B a default by the company will make the charge crystallise into a fixed charge. C specific assets are available to meet investors' claims if the company defaults on interest or capital payments. O security is provided in the event that the borrower defaults on the final capital payment, but not in the event of default on the interest payments. [2] 9 Which of the following will NOT dilute the value of the equity in a business? warrants Eurobonds convertible loan stock executive stock options [2]It is desired to investigate the level of premium charged by two companies for contents policies for houses in a certain area. Random samples of 10 houses insured by Company A are compared with 10 similar houses insured by Company B. The premiums charged in each case are as follows: Company A 117 154 166 189 190 202 233 263 289 331 Company B 142 160 166 188 221 241 276 279 284 302 For these data: ) A=2,134, _ AZ =494,126, >8=2,259, > 82 =541,463. (1) Draw the data given above on a suitable diagram and hence comment briefly on the validity of the assumptions required for a two-sample t test for the premiums of these two companies. [3] (ii) Assuming that the premiums are normally distributed, carry out a formal test to check that it is appropriate to apply a two-sample t test to these data. [4] (Wii) Test whether the level of premiums charged by Company B was higher than that charged by Company A. State your p-value and conclusion clearly. [3] (iv) Calculate a 95% confidence interval for the difference between the proportions of premiums of each company that are in excess of f200. Comment briefly on your result.[3] (v) The average premium charged by Company A in the previous year was $170. Formally test whether Company A appears to have increased its premiums since the previous year. [3] [Total 16]
