An asset has an average historical rate of return of 12.1 percent and a variance of 0.01089091. What is the upper percentage range of returns would you expect to see approximately two-thirds of the time? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

A floating (strike) European lookback call and a floating (strike) European lookback put, on a nondividend paying stock, both expire at date T. At date t<=T, the underlying stock price approaches zero. [a] Please deduce the lookback call price at t, c(t). Please justify your reasoning without using complex formulas. [b] Please deduce the lookback put price at t, p(t). Please justify your reasoning without using complex formulas.

Balance Sheets of December 31, 2016 and 2017 and Income Statement for the Year Ended December 31, 2017 are given below. Please complete columns Dollar Change, Source or Use Increase/Decrease, Major Source/Major Use, and Cash Flow Activity to prove Increase or decrease in Cash. Compute Short-term Solvency/Liquidity for both years to answer whether Corbett Enterprises’ liquidity has improved or declined. Also, compute Long-term Solvency, Asset Utilization, and Profitability ratios for 2017 since only the 2017 income Statement is given.

Choose the alternative the best answers the question.


6. Consider the following two Treasury securities:

Bond Price Modified duration (years) A $100 6 B $ 80 7 Which bond will have the greater dollar price volatility for a 25-basis-point change in interest rates? a. Bond A b. Bond B

7. The breaking down of a system to gain insight into its compositional sub-systems is known as: a. Top down approach b. Bottom-up approach c. Quantitative approach

8. Being a senior secured debt holder in an investment grade corporation assures the investor that she will incur no loss on a credit default. a. True b. False


Calculate the requested measures in questions 10 through 12 for bonds A and B (assume that each bond pays interest semiannually):

   Bond A Bond B Coupon   8% 9% Yield to maturity 8% 8% Maturity (years)     2      5 Par   $100.00 $100.00 Price   $100.00 $104.055

9. What is the price value of a basis point for bond B only? a. 0.0181 b. 0.0416 c. 0.0597 d. 0.0746

10. Compute the approximate duration for bond A only using the shortcut formula by changing yields by 20 basis points a. 1.814948 b. 2.465732 c. 4.277338 d. 8.344402
11. Compute the approximate duration for bond B only using the shortcut formula by changing yields by 20 basis points a. 1.814948 b. 2.465732 c. 4.277338 d. 3.994507

12. Compute the approximate convexity measure for bond A only using the shortcut formula by changing yields by 20 basis points a. 1.814948 b. 2.465732 c. 4.277348 d. 3.994507

13. Compute the approximate convexity measure for bond B only using the shortcut formula by changing yields by 20 basis points a. 1.814948 b. 19.763824 c. 4.277348 d. 3.994507

14. Which U.S. Treasury securities do not make a coupon payment? a. Treasury Bonds b. Treasury Notes c. Treasury Bills d. All of the above

15. The most recently auctioned issue of treasury securities is called: a. On-the-run issue b. Off-the-run issue c. STRIPS issue d. Spot issue

16. Treasury securities are priced based on: a. The yield curve b. The theoretical spot rates c. The par coupon curve

17. Investment grade bond issues that were later downgraded to non-investment grade (junk) bonds are commonly known as: a. Dark angels b. Fallen angels c. Junk hybrids d. Bankruptcy candidates

18. Deferred coupon bonds that give the issuer the option to make a coupon payment with cash or with a similar bond is known as: a. Step-up bonds b. Deferred-interest bonds c. Payment-in-kind bonds

19. Which statement below is NOT correct? a. Eurobonds can be issued in various currencies b. Eurobonds are typically less liquid than Yankee bonds c. Eurobonds pay semi-annual coupons d. Eurobonds typically have weaker covenants than U.S. domestic bonds

20. Which bond warrant entitles the warrant owner to buy additional bonds from the issuer at the same price and yield? a. Equity warrant b. Debt warrant c. Currency warrant

21. A bond that is issued simultaneously in several bond markets throughout the world and can be issued in any currency is: a. Global bond b. Euro medium-term note c. Convertible bond d. Yankee bond

Q1. Firoz Corp. obtained a trade name in January 2010, incurring legal costs of SAR15,000. The company amortizes the trade name over 8 years. Moon successfully defended its trade name in January 2011, incurring SAR 4,900 in legal fees. At the beginning of 2012, based on new marketing research, Moon determines that the recoverable amount of the trade name is SAR 12,000.

            Prepare the necessary journal entries for the years ending December 31, 2010, 2011, and 2012.

Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a $1,000 par value. Your required return on Bond X is 11%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 9.5%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.) Do not round intermediate calculations. Round your answer to the nearest cent.

A company declared a $0.80 per share cash dividend. The company has 100,000 shares authorized, 45,000 shares issued, and 42,000 shares of common stock outstanding. What is the journal entry to record the dividend declaration?

Debit Dividends and credit Dividends Payable for $36,000

Debit Dividends and credit Dividends Payable for $33,600

Debit Dividends Payable and credit Cash for $36,000

Debit Dividends Payable and credit Cash for $80,000

The Retained Earnings balance was $22,900 on January 1. Net income for the year was $18,100. If Retained Earnings had a credit balance of $23,800 after closing entries were made for the year, and if additional stock of $5,200 was issued during the year, what was the amount of dividends declared during the year?

$17,200

$23,700

$23,300

$13,000

A company reported net income of $6 million. During the year the average number of common shares outstanding was 3 million. The price of a share of common stock at the end of the year was $5. There were 400,000 shares of preferred stock outstanding on average and no dividends were declared and the preferred stock is noncumulative.

Use the information above to answer the following question. The EPS is approximately:

$0.40.

$1.76.

$1.86.

$2.00.

Use the information above to answer the following question. The Price/Earnings ratio is approximately:

2.00.

2.50.

2.84.

12.50.

1. Please read the article on "HOW DO CFOS MAKE CAPITAL BUDGETING AND CAPITAL STRUCTURE DECISIONS?" and explain the most popular Capital Budgeting Technique.

should High Frequency trading be more regulated or not and explain why it should or shouldn't be more regulated ?

7. In 2019, Taxpayer (“T”) is a single, 65 year-old individual who is a U.S. citizen. T turned 65 in 2019. T receives $18,000 of social security income in 2019 (the first year T received Social Security Benefits). Also, T received $6,000 of interest income from a municipal bond in both 2018 and 2019. On June 1, 2018, T took a job with a multi-national corporation which paid T $5,000 per month. As a condition of the job, T is required to work overseas, in the country of Austria, and T did in fact work in Austria for 214 days (From June 1 – December 31) in 2018. T is offered to continue to work (still in Austria and still for $5,000 per month) for seven additional months (from January 1 until the end of July, which is 211 days) in 2019, at which point T’s position would terminate. T is trying to decide whether T wants to continue to work for seven months in 2019 or quit on January 1. (These are T’s only transactions during 2018 and 2019).

a. What is T’s Gross Income in 2019 if T continues to work through July of 2019? __________________________________

b. What is T’s Gross Income in 2019 if T does NOT continue to work in 2019? __________________________________

c. Excluding the effects of the payroll tax and any credits, What is the economic benefit to T of continuing to work for 7 months in 2019 (meaning how much total extra money, after-tax, will T have as a result of continuing to work in 2019)? _____________________

Your sister will start college in five years. She just informed your parents that she wants to go to Georgia Southern University. It will cost $20,000 per year for four years (cost assumed to come at the beginning of each year). Anticipating her ambitions, your parents have saved already $15,000 and will continue to invest at the end of each month for the next five years. How much more will your parents have to invest each month for the next 5 years to have the necessary funds for your sister’s college education? Assume the interest rate is 10% annual compounding.

1. PepsiCo, near the top of Table 2-5 in the chapter, is a company that provides
comprehensive financial statements. Go to finance.yahoo.com. In the box next to
“Get Quotes,” type in its ticker symbol PEP and click.

2. Scroll all the way down to “Financials” and click on “Income Statement.” Compute
the annual percentage change between the three years for the following:
a. Total revenue.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
b. Net income applicable to common shares.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)

3. Now click on “Balance Sheet” and compute the annual percentage change
between the three years for the following: (PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
a. Total assets.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
b. Total liabilities.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)

4. Write a one-paragraph summary of how the company is doing.

TO FIND THE DATA:

1. PepsiCo, near the top of Table 2-5 in the chapter, is a company that provides
comprehensive financial statements. Go to finance.yahoo.com. In the box next to
“Get Quotes,” type in its ticker symbol PEP and click.

2. Scroll all the way down to “Financials” and click on “Income Statement.” Compute
the annual percentage change between the three years for the following:

Rachel purchased a car for $22,500 three years ago using a 4-year loan with an interest rate of 7.2 percent. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan.

What is the minimum price Rachel would need to receive for her car? Calculate her monthly payments, then use those payments and the remaining time left to compute the present value (called balance) of the remaining loan. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Minimum price= _________________

On January 1, 2016, Horton Inc. sells a machine for $23,200. The machine was originally purchased on January 1, 2014 for $40,200. The machine was estimated to have a useful life of 5 years and a residual value of $0. Horton uses straight-line depreciation. In recording this transaction:

a loss of $920 would be recorded.

a loss of $17,000 would be recorded.

a gain of $23,200 would be recorded.

a gain of $920 would be recorded.

Bobby Darling is the only employee of Atlantic Records, Inc. During the first week of January, Darling earned $3,000.00 and had federal and state income tax withholdings of $150.00 and $56.25, respectively. FICA taxes are 7.65 % on earnings up to $117,000. State and federal unemployment taxes for the period are $187.50 and $30.00, respectively.

$2,770.50

$3,000.00

$2,564.25

$2,346.75

On October 1, 2015, Attra Inc. borrows $200,000 on a three-year note that requires the company to pay 6% interest on March 31 and September 30. On December 31, 2015, the adjusting entry to accrue interest on the note should debit:

Interest Expense and credit Interest Payable for $3,000.

Interest Expense and credit Interest Payable for $6,000.

Interest Expense and credit Cash for $6,000.

Interest Payable and credit Interest Expense for $3,000.

Zorn Inc. makes a sale for $480. The company is required to collect sales taxes amounting to 5%. What is the amount that will be credited to the Sales Tax Payable account?

$24

$23

$240

$25

Your company sells $42,000 of one-year, 15% bonds for an issue price of $40,000. The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

rev: 06_25_2016_QC_CS-54689

$40,000.

$42,000.

$46,300.

$48,300.

1. What is the implied annual rate if you deposit $750 and receive $2,000 in 8 years, assuming interest is compounded quarterly?

2. How many months it will take to grow your money from $10,250 to $25,000 if you can earn an interest of 8% compounded monthly? How many years will it take?

4. The difference between an ordinary annuity and an annuity due is the:

a. timing of the annuity payments.

b. interest rate applied to the annuity payments.

c. number of annuity payments.

d. amount of each annuity payment.

5. Which one of the following is an annuity due?

a. $225 paid at the end of each monthly period for an infinite period of time

b. $100 paid at the end of each monthly period for one year

c. $225 paid forever

d. $600 paid at the beginning of every quarter for five years, starting today

6. What is the present value of $150 received at the beginning of each year for 16 years? The first payment is received today. Use a discount rate of 9%.

7. What is the present value of $250 received at the beginning of each year for 21 years? Assume that the first payment is received today. Use a discount rate of 12%

8. What is the future value of semi-annual payments of $6,500 for eight years at 12 percent?

9. You are considering an investment which would entail $5,000 payments each year for 20 years. The investment will pay 7 percent interest. How much will this investment be worth at the end of the 20 years?

10. Kelly starting setting aside funds six years ago to buy some new equipment for her firm. She has saved $2,000 each quarter and earned an average rate of return of 7.5 percent. How much money does she currently have saved for this purpose?

11. Today, you are purchasing a $85,000 20-year car loan at 6 percent. You will pay annually at the end of each year. What is the amount of each payment?

12. You just won a lottery that will pay you $2,500 a year for twenty years. You will receive your first payment today. If you can earn 8 percent on your money, what are your winnings worth to you today? (Note that since you will receive your first payment today, it is an annuity due problem).