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- Download: http://writingsdepot.com/downloads/financial-management-questions/
- 1. Contrast the three primary categories of cash flows provided in the statement of cash flows.
- Your response should be at least 250 words in length.
- 2. Future value of single sum problem.
- You put $1,000 in an investment account today which will earn 7% over the next 20 years, what is the future value?
- 3. Calculate a table of interest rates based on the following information:
- The pure interest rate is 2.5%
- Inflation expectations for year 1 = 2%, year 2 =4%, years 3-5 =5%
- The default risk is .1% for year one and increases by .1% over each year
- Liquidity premium is 0 for year 1 and increases by .15% each year
- 4. Valuation – convertible bond.
- You purchased one of Big Corp.’s 8%, 10-year convertible bonds at its $1,000 par value a year ago when the company’s common stock was selling for $20. Similar bonds without a conversion feature returned 12% at the time. The bond is convertible into stock at a price of $30. The stock is now selling for $35.
- Assume no dividends.
- a) You exercise the conversion feature today and immediately sold the stock you received. Calculate the total return on your investment.
- b) What would your return have been if you had invested $1,000 in Big’s stock instead of the bond?
- 5. Risk and Return, Coefficient of Variation.
- Based on the following information, calculate the coefficient of variation and select the best investment based on the risk/reward relationship:
- Std Dev. Exp. Return
- Company A 10.4 13.2
- Company B 7.6 8.7
- Download: http://writingsdepot.com/downloads/financial-management-questions/
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