Finc 30 Study guides, Class notes & Summaries

After reading the new account insert in his monthly statement, Tony Mercadante determined that the FDIC considers a joint account as a separate depositor. He and his wife, Cynthia, have three accounts at ABC Bank & Trust, one joint account with a balance of $60,000 and two individual account - his has a $150,000 balance, and hers has a $254,000 balance. What amount of FDIC coverage do Tony and Cynthia have on their accounts? correct answers Tony's account balance of $150,000 is completely cover...

A corporate bond's coupon rate is the annual coupon payment divided by: the bond's face value. the bond's current price. $100. the bond's maturity period. correct answers The bond's face value University Corp. issued five-year bonds that pay a coupon of 6.5 percent semiannually. The current market rate for similar bonds is 5.5 percent. How much will you be willing to pay for the bond today? Do not round intermediate calculations. Round your answer to the nearest dollar. $1,043 $1,0...

What is a Forward Contract? Ans- ∙A forward contract is a binding agreement to buy/sell an underlying asset in the future at a price set today Describe the meaning of a forward price, delivery date and payoff of a forward contract Ans- ∙The forward price is the price at which two parties agree today to transact/deliver in the future ∙The delivery date is the time at which the contract is settled ∙The payoff of a forward contract is the value created by the position at expira...

Matilda Industries pays a dividend of $2.25 per share and is expected to pay this amount indefinitely. If Matilda's cost of capital is 12%, what would Matilda's stock price be expected to be? correct answers This is the classic zero-growth dividend case, which can be solved as a perpetuity: P = D/R = $2.25/.12 =$18.75 Staal Securities will pay a dividend of $3.40 next year. The company promises to increase its dividend by 4.5% per year indefinitely. If you require a return of 11.0% on you...

Corporate finance is the art and the science of addressing what three issues? correct answers capital budgeting, capital structure, and working capital management In the corporate finance organizational chart, what are the two main parts? correct answers Treasury and accounting What are four disadvantages of a sole proprietorship? correct answers unlimited liability, limited lifespan equal to owner's, relatively difficult to raise capital, and ownership difficult to transfer True or fa...

Travis is buying a car and will finance it with a loan that requires monthly payments of $265 for the next four years. His car payments can be described by which one of the following terms? Ans- Annuity Janis just won a scholarship that will pay her $500 a month, starting today, and continuing for the next 48 months. Which one of the following terms best describes these scholarship payments? Ans- Annuity Due The Jones Brothers recently established a trust fund that will provide annua...

Stakeholder correct answers -Has a stake in the company -Anyone (other than an owner) who has a claim on the cash flows of a firm/company -Should have 0% input in the company What are some examples of stakeholders? correct answers Employees, suppliers, creditors, governments, Cash flows correct answers -Cash profits on paper; are "king" Why are cash flows considered "king"? correct answers That is what increases the value of a company Productive assets correct answers Assets th...

central bank correct answers a national bank that provides financial and banking services for its country's government and commercial banking system, as well as implementing the government's monetary policy and issuing currency. european central bank correct answers central bank for the euro and administers monetary policy of the Eurozone, which consists of 19 EU member states and is one of the largest currency areas in the world. federal reserve system correct answers is the central ban...

Define Derivarive a financial instrument that has a value determined by the value of something else (underlying) Examples of Derivatives Stocks, bonds, commodities, currencies, interest rates Types of Derivatives Forwards, futures, options, swaps Why use derivatives Risk management Speculation Reduce transaction costs Regulatory Arbitrage

What Is a Derivative?A financial instrument that has a value determined by the price of something else (i.e., the underlying). NovationNovation is the substitution of one counterparty for another. Common underlying assetsThe most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. What are the four stages of derivatives history presented in lectures?1. In ancient Greece, around the 6th century B.C., there were the equivalent of der...