Exam (elaborations)
COB 300 Finance- Final Exam Questions and Answers
- Course
- Institution
COB 300 Finance- Final Exam Questions and Answers
[Show more]
Content preview
COB 300 Finance- Final Exam Questionsand Answers
Preemptive right - Answers -a provision in the corporate charter or bylaws that gives
common stockholders the right to purchase on a pro rata basis new issues of common
stock
Market Price - Answers -the price at which a stock sells in the market
Growth Rate - Answers -the expected rate of growth in dividends per share
Required Rate of Return - Answers -the minimum rate of return on a common stock that
a stockholder considers acceptable
Expected Rate of Return - Answers -the rate of return on a common stock that a
stockholder expects to receive in the future
Dividend Yield - Answers -the expected dividend divided by the current price of a share
of stock
Horizon Date - Answers -the date when the growth rate becomes constant
Horizon Value - Answers -the value at the horizon date of all dividends expected
thereafter
Bond - Answers -a long-term debt instrument
Treasury Bonds - Answers -bonds issued by the federal government, sometimes
referred to as government bonds
Corporate Bonds - Answers -bonds issued by corporations
Municipal Bonds - Answers -bonds issued by state and local governments
Par Value - Answers -the face value of a bond
Coupon Payment - Answers -the specified number of dollars of interest paid each year
Coupon Interest Rate - Answers -the stated annual interest rate on a bond
, Call Provision - Answers -a provision in a bond contract that gives the issuer the right to
redeem the bonds under specified terms prior to the normal maturity date
Sinking Fund Provision - Answers -a provision in a bond contract that requires the
issuer to retire a portion of the bond issue each year
Discount Bond - Answers -a bond that sells below its par value
Premium Bond - Answers -a bond that sells above its par value
Yield to Maturity - Answers -the rate of return earned on a bond if it is held to maturity
Yield to Call - Answers -the rate of return earned on a bond when it is called before its
maturity
Target Capital Structure - Answers -the mix of debt, preferred stock, and common
equity the firm plans to raise to fund its future projects
Capital Components - Answers -one of the types of capital used by firms to raise funds
WACC - Answers -a weighted average of the component costs of debt, preferred stock
and common equity
Flotation Cost - Answers -the percentage cost of issuing common stock
Capital - Answers -investors-supplied funds such as long- and short- term loans from
individuals and institutions, preferred stock, common stock, and retained earnings
Optimal Capital Structure - Answers -the capital structure that maximizes a stock's
intrinsic value
Business Risk - Answers -the riskiness inherent in the firm's operations if it uses no debt
Operating Leverage - Answers -the extent to which fixed costs are used in a firms
operations
Operating Breakeven - Answers -the output quantity at which EBIT= 0
Financial Risk - Answers -an increase in stockholders risk, over and above the firms
basic business risk, resulting from the use of financial leverage
Financial Leverage - Answers -the extent to which fixed-income securities are used in a
firm's capital structure
Unlevered Beta - Answers -the firms beta coefficient if it has no debt
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller millyphilip. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67096 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now