Fin 351 full course latest 2106 november all discussion, quizes assignment and course project ]

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FIN 351 Full Course-Latest 2106 November
[all discussion, quizes assignment and course project ]
Question
week 1
Primary and Secondary Markets (graded)
What is the difference between a primary market and a secondary market? Provide examples of well-
known markets and categorize them appropriately. What are several examples of different types of
indices, and what do they measure?
Financial Data (graded)
Go to .yahoo.com/">http://finance.yahoo.com/, and tell us what kinds of financial data you can find
on the site. Are there other sites where you can find similar data? Please share with the class the sites
you find.
week 2
Industry Life Cycles (graded)
What are the five stages of industry life cycles? Choose five industries that you believe represent each
part of the cycle, and explain why each industry may fall under each respective stage. How will
investor expectations related to capital needs, dividend payments, and returns change under each
stage?
P/E Ratios and Stocks (graded)
What is a P/E ratio, and why is it important in stock valuation? Choose a company stock, and discuss
its P/E ratio. Do you believe the P/E ratio provides an accurate assessment of the company’s
performance?
week 3
Special Events in Investing (graded)
Under what special situations do you think it is best to invest? Please explain and support your
reasoning.

This section lists options that can be used to view responses.
Technical Analysis in Investing (graded)
Is technical analysis (charting) a valid way to manage your investments? Why or why not? Please
support your answer with class material or material that you find on the Internet.
week 4
Bonds Versus Stocks (graded)
Why would you want to invest in a bond over a stock? What are some of the risks associated with
investing in bonds?
Duration (graded)
How can duration be used to determine a rough measure of the percentage change in the price of a
bond as a result of interest rate changes?
week 5
What are Derivatives and Convertibles? (graded)
What are some derivative products? Illustrate their use as investment vehicles. What are convertible
securities? What are the advantages and disadvantages of owning a convertible security?
Options Trading and Financial Futures (graded)
What is the difference between writing a covered and a naked call option? Do you think naked options
are more of an investment or purely used for speculation? Please support your reasoning.
week 6
Mutual Funds (graded)
What are some of the advantages and disadvantages of investing in a mutual fund? Explain why the
vast array of mutual funds available may be a partial drawback for investors. How can investors
assess mutual fund performance?
Real-Asset Investing (graded)
What real asset do you think is best to invest in for the present environment and why? Explain why
investor choices may have changed over the last several decades.

week 7
Systematic and Unsystematic Risk (graded)
Discuss systematic risk and unsystematic risk, and how they are measured. Is it possible to neutralize
or lessen the effects of each of these risks? If yes, how can this be accomplished?
Diversification (graded)
What is the advantage of a diversified portfolio? Why invest in different types of asset classes? Are
there any disadvantages associated with a diversified portfolio?
assignments
week 1
Answer the following items from your textbook:
 Chapter 1 Discussion Question 13
 Chapter 1 Problem 5
Submit your answers in a Word document to the Week 1 Assignments Dropbox. Grading rubric may be
found in Doc Sharing. Follow APA format.

Submit your assignment to the Dropbox, located at the top of this page. For instructions on how to
use the Dropbox, read these .equella.ecollege.com/file/8ff9f27a-3772-48cf-9855-
4bec4e6706bf/1/Dropbox.html">step-by-step instructions.
See the Syllabus section "Due Dates for Assignments & Exams" for due date information.
FIN 351 Week One Homework
Devry University
Chapter 1 Q#13
Many people think of risk as the danger of losing money. Is this the same way that risk is
defined in finance?
Chapter 1 Q #5 Sally is reviewing the performance of several portfolios in the family
trusts. Trust A is managed by Wall Street Investment Advisors and Trust B is managed by
LaSalle Street Investment Advisors. Both trusts are invested in a combination of stocks and
bonds and have the following returns: .jpg">
a. Calculate the annualized geometric and arithmetic returns over this 5-year period.
b. Which manager performed the best, and is there a significant enough difference for Sally
to move her money to the winning manager?
c. Explain the difference between the geometric and arithmetic returns.
Chapter 2 Q#2
What is an efficient market?
Chapter 3 Q#17
If you did not wish a high-priced or heavily capitalized firm (one with high total market
value) to overly influence your index, which of the weighting systems described in this
chapter would you be likely to use?
Chapter 3 Q#5 You sell 100 shares of Norton Corporation short. The price of the stock is
$60 per share. The margin requirement is 50 percent.
a. How much is your initial margin?
b. If stock goes down to $42, what is your percentage gain or loss on the initial margin
(equity)?
c. If stock goes up to $67.50, what is your percentage gain or loss on the initial margin
(equity)?
d. In part c, if the minimum margin standard is 30 percent, will you be required to put up
more margin? (Do the additional necessary calculations to answer this question.)
Chapter 3 Q#12
Assume the following five companies are used in computing an index:
.jpg">
a. If the index is price weighted, what will be the value of the index on December 31, 2007?
(Take the average price on December 31, 2007, and divide by the average price on January
1, 1984, and multiply by 100.)
the value of the index on December 31, 2007? (Take the total market value on December
31, 2007, and divide by the total market value on January 1, 1984, and multiply by 100.)
c. Explain why the answer in part b is different from the answer in part a.

week 2
Homework Assignment
Answer the following items from your textbook.
DeVry University
FIN 351
May 15, 2016
1.
What is the advantage of using a composite of indicators (such as the 10 leading indicators) over
simply using an individual indicator?
2.
Comment on whether each of the following three industries is sensitive to the business cycle . If it is
sensitive, does it do better in a boom period or a recession?
a.

Automobiles-
b.
Pharmaceuticals-
Housing-
3.
List the five stages of the industry life cycle. How does the pattern of cash dividend payments change
over the cycle? (A general statement is all that is required.)
4.
Why might a firm begin paying stock dividends in the growth stage?
5.
For cyclical companies, why might the current P/E ratio be misleading?
6.
Assume D1 = $1.60, Ke = 13 percent, g = 8 percent. Using Formula 7–5 on page 168, for the
constant growth dividend valuation model, compute P0.
7.
Leland Manufacturing Company anticipates a nonconstant growth pattern
for dividends. Dividends at the end of year 1 are $4.00 per share and are
expected to grow by 20 percent per year until the end of year 4 (that’s three
years of growth). After year 4, dividends are expected to grow at 5 percent as
far as the company can see into the future. All dividends are to be discounted
back to present at a 13 percent rate (Ke = 13 percent).
a.
Project dividends for years 1 through 4 (the first year is already given).
Round all values that you compute to two places to the right of the
decimal point throughout this problem.
b.
Find the present value of the dividends in part a.
Year
Dividends (20% growth)
P.V. Factor 13%
c.
Project the dividend for the fifth year (D5).
d.
Use Formula 7–5 on page 168 to find the present value of all future
dividends, beginning with the fifth year’s dividend. The present value you
find will be at the end of the fourth year. Use Formula 7–5 as follows: P4 =

e.
Discount back the value found in part d for four years at 13 percent.
P.V. of $90.75 four years from now at 13%
f.
Add together the values from parts b and e to determine the present
value of the stock.
8.
Mr. Phillips of Southwest Investment Bankers is evaluating the P/E ratio of Madison Electronics
Conveyors (MEC). The firm’s P/E is currently 17. With
earning per share of $2, the stock price is $34.
The average P/E ratio in the electronic conveyor industry is presently 16.
However, MEC has an anticipated growth rate of 18 percent versus an industry average of 12 percent,
so 2 will be added to the industry P/E by Mr.
Phillips. Also, the operating risk associated with MEC is less than that for the industry because of its
long-term contract with American Airlines. For this reason, Mr. Phillips will add a factor of 1.5 to the
industry P/E ratio.
The debt-to-total-assets ratio is not as encouraging. It is 50 percent, while the industry ratio is 40
percent. In doing his evaluation, Mr. Phillips decides to subtract a factor of 0.5 from the industry P/E
ratio. Other ratios, including dividend payout, appear to be in line with the industry, so Mr. Phillips will
make no further adjustment along these lines.
However, he is somewhat distressed by the fact that the firm only spent 3 percent of sales on
research and development last year, when the industry norm is 7 percent. For this reason he will
subtract a factor of 1.5 from the industry P/E ratio.
Despite the relatively low research budget, Mr. Sanders observes that the firm has just hired two of
the top executives from a competitor in the industry. He decides to add a factor of 1 to the industry
P/E ratio because of this.
a.
Determine the P/E ratio for MEC based on Mr. Phillips’s analysis.
Industry P/E ratio
b.
Multiply this times earnings per share, and comment on whether you think the stock might possibly be
under- or overvalued in the marketplace at its current P/E and price.
The analysis would appear to be that the stock with a current P/E of 17 and price of $34 is
undervalued.
9.
What might a high dividend-payout ratio suggest to an analyst about a company’s growth prospects?
10.
Explain the probable impact of replacement-cost accounting on the ratios of return on assets, debt to
total assets, and times interest earned for a firm that has substantial old fixed assets.
11.
A firm has assets of $1,800,000 and turns over its assets 2.5 times per year.
Return on assets is 20 percent. What is its profit margin (return on sales)?
12.

The Multi-Corporation has three different operating divisions. Financial
information for each is as follows:
a.
Which division provides the highest operating margin?
b.
Which division provides the lowest after-tax profit margin?
c.
Which division has the lowest after-tax return on assets?
d.
Compute net income (after-tax) to sales for the entire corporation.
e.
Compute net income (after-tax) to assets for the entire corporation.
f.
The vice president of finance suggests the assets in the Appliances division be sold off for $10 million
and redeployed in Sporting Goods.
g.
Explain why Sporting Goods, which has a lower return on sales than
Appliances, has such a positive effect on return on assets.
week 3
Homework Assignment

FIN 351 Homework Week 3
DeVry University
1. Define special or abnormal returns.
2.
What does Table 9–5 on page 252 indicate about the relationship between a firm’s P/E ratio and its
average quarterly return?
3.
If you “buy straw hats in winter” or buy “when there is blood in the street,” what kind of investor are
you?
4.
What is technical analysis?
5.
Outline the basic assumptions of technical analysis.
6.
Also under the Dow Theory, what other average is used to confirm movements in the Dow Jones
Industrial Average?
week 4
Homework Assignment
Submit your answers in a Word document to the Week 4 Assignments Dropbox.

DeVry University
FIN 351
May,28/2016
WEEK 4 HOMEWORK ASSIGNMENT
• Chapter 11 Discussion Question 3 (Page 308)- Explain how a sinking fund works.
• Chapter 11 Discussion Question 11 (Page 308)- What tax advantages are associated with municipal
bonds?
• Chapter 11 Problem 2 (Page 309)- If an investor is in a 30 percent marginal tax bracket and can
purchase a straight (nonmunicipal bond) at 8.37 percent and a municipal bond at 6.12 percent, which
should he or she choose?
• Chapter 11 Problem 6 (Page 309)-
Assume a $1,000 Treasury bill is quoted to pay 5 percent interest over a six-month period.
• How much interest would the investor receive?
6 month period:
• What will be the price of the Treasury bill?
• What will be the effective yield?
• Chapter 11 Problem 8 (Page 309)- The price of a Treasury strip note or bond can be found
using.vitalsource.com/books/0077637011/content/id/appC">Appendix C toward the back of the
text. It is simply the present value factor from the table times the maturity (par) value of the Treasury
strip. Assume you are considering a $10,000 par value Treasury strip that matures in 25 years . The
discount rate is 7 percent. What is the price (present value) of the investment?
• Chapter 12 Discussion Question 3 (Page 332)- Why does a bond price change when interest rates
change?
• Chapter 12 Problem 2 (Page 333)- Given a 15-year bond that sold for $1,000 with a 9 percent
coupon rate, what would be the price of the bond if interest rates in the marketplace on similar bonds
are now 12 percent? Interest is paid semiannually. Assume a 15-year time period.
• Chapter 12 Problem 6 (Page 333)- What is the current yield of an 8 percent coupon rate bond priced
at $877.60?
• Chapter 12 Problem 7 (Page 333)- What is the yield to maturity for the data
in.vitalsource.com/books/0077637011/content/id/P12-177">problem 6? Assume there are 10 years
left to maturity. It is a $1,000 par value bond. Use the trial-and-error approach with annual
analysis. [Hint: Because the bond is trading for less than par value, you can assume the interest rate
(i) for which you are solving is greater than the coupon rate of 8 percent.]
• Chapter 12 Problem 16 (Page 333)- The following pattern for one-year Treasury bills is expected
over the next four years:
• What return would be necessary to induce an investor to buy a two-year security?
• What return would be necessary to induce an investor to buy a three-year security?
• What return would be necessary to induce an investor to buy a four-year security?
• Chapter 18 Discussion Question 5 (Page 488)- As market rates of interest become higher, what
impact does this have on duration?
• Chapter 18 Problem 5 (Page 490)- You are considering the purchase of two $1,000 bonds. Your
expectation is that interest rates will drop, and you want to buy the bond that provides the maximum
capital gains potential. The first bond has a coupon rate of 6 percent with four years to maturity, while
the second has a coupon rate of 14 percent and comes due six years from now . The market rate of
interest (discount rate) is 8 percent. Which bond has the best price movement potential? Use duration
to answer the question.

week 5
Homework Assignment
FIN 351
DeVry University
Week Five Homework Assignment
· Why would an investor be interested in convertible securities? (What do they offer to the
investor?)
· A convertible bond has a face value of $1,000, and the conversion price is $50 per
share. The stock is selling at $42 per share. The bond pays $60 per year interest and is
selling in the market for $930. It matures in 15 years. Market rates are 10 percent per year.
a. What is the conversion ratio?
b. What is the conversion value?
c. What is the conversion premium (in dollars and percent)?
d. What is the floor value or pure bond value?
3. What is meant by the exercise or strike price on an option?

4. What are two option strategies to take advantage of an anticipated decline in stock
prices? (Relate one to call options and the other to put options.)
5. Look at the option quotes in Table 14–2 on page 368.
a. What is the closing price of the common stock of SINGLE Systems?
b. What is the highest strike price listed?
c. What is the price of a December 20 call option?
d. What is the price of a January 22.50 put option?
6. Assume a stock is selling for $66.75 with options available at 60, 65, and 70 strike
prices. The 65 call option price is at $4.50.
a. What is the intrinsic value of the 65 call?
b. Is the 65 call in the money?
c. What is the speculative premium on the 65 call option?
d. What percentage does the speculative premium represent of common stock price?
e. Are the 60 and 70 call options in the money?
7. How does the concept of margin on a commodities contract differ from that of margin on
a stock purchase?
8. How can using the financial futures markets for interest rates and foreign exchange help
financial managers through hedging? Briefly explain, and give one example of each.
9. Sterling Jones purchases a 5,000 troy ounce contract on silver at $13.00 an ounce. At the
same time he purchases an 112,000 pound sugar contract at 0.191 cents a pound. If the
price of silver goes down to $12.94 at the same time the price of sugar goes up to 0.196
cents, will Sterling have an overall net gain or loss?
10. Why are stock index futures and options sometimes referred to as derivative products?
Why do some investors believe derivative products make the markets more volatile?
“
11. Why is it unrealistic for a portfolio manager to sell a large portion of his portfolio if he
thinks the market is about to decline?
week 6

Homework Assignment
Yoseph Adwan
Fin 351
Week 6 Hw
Chapter 4 Discussion Question 15
What is dollar-cost averaging? If you were a particularly astute investor at timing moves in
the market, would you want to use dollar-cost averaging?
8. Are foreign markets likely to be more or less efficient than U.S. markets? What effect
does this have on bid-ask spreads and the ability to absorb large transactions?
Chapter 19 Problem 3
3. Assume you invest in the Japanese equity market and have a 25 percent return (quoted
in yen). However, during the course of your investment, the yen declines versus the
dollar. By what percentage could the yen decline relative to the dollar before all your gain is
eliminated?
4. What two factors have hurt real estate in recent times? Why might the future outlook be
more positive?
12. What are some factors that drive up the price of gold? What are factors that drive it
down?

week 7
Homework Assignment
Yoseph Adwan
Fin 351
Week 7
WEEK 7 HOMEWORK ASSIGNMENT
• Chapter 17 Discussion Question 4 pg. 456-In a two-asset portfolio, is the portfolio standard
deviation a weighted average of the two individual stocks’ standard deviation? Explain.
• Chapter 17 Discussion Question 6 pg. 456-What are the two characteristics of points along the
efficient frontier? Do portfolios exist above the efficient frontier?
• Chapter 17 Discussion Question 8 pg. 456-Describe the optimum portfolio for an investor in terms of
indifference curves and the efficient frontier.
• Chapter 17 Discussion Question 10 pg. 456-In examining the capital market line as part of the
capital asset pricing model, to increase portfolio return (KP) what other variable must you increase?
• Chapter 17 Discussion Question 12 pg. 456- What can be assumed in terms of volatility for a stock
that has a beta of 1.2?
• Chapter 17 Discussion Question 13 pg. 456- What does the security market line indicate? In general
terms, how is it different from the capital market line?

quizes
week 1
(TCO 1) When ranking security returns from highest return to lowest return, the data shows that the
annualized returns are as follows:
: Large stocks, small stocks, long-term corporate bonds, long-term government bonds, and treasury
bills.
Treasury bills, long-term government bonds, long-term corporate bonds, large stocks, small stocks
Large stocks, small stocks, long-term government bonds, long-term corporate bonds, and treasury
bills.
Small stocks, large stocks, long-term corporate bonds, long-term government bonds, and treasury
bills.
Question 2. Question : (TCO 1) A direct equity claim arises through investment in _____.
: bonds and other debt instruments
common stocks, warrants, and options
preferred stock and commodity futures

mutual funds
Comments:
Question 3. Question : (TCO 1) What factors must be considered in choosing between investment
alternatives?
: Risk and liquidity
Interest or dividends versus capital gains
Timeframe for managing funds and evaluating performance and tax effects
All of the above
Question 4. Question : (TCO 1) Which of the following is NOT a characteristic of an organized
exchange?
: An organized exchange functions as a primary market.
Securities are bought and sold in an auction market by brokers acting as agents for buyers and sellers
in a central location.
An organized exchange may be either national or regional.
An organized exchange has a central location where all trading takes place.
Question 5. Question : (TCO 1) Secondary markets provide _____.
: efficiency
continuity
competition
All of the above
Comments:
Question 6. Question : (TCO 1) The process of selling a new issue of securities so that the price is
guaranteed to the selling firm is referred to as _____.
: underwriting
best efforts
direct by issuer
shelf registration
Comments:
Question 7. Question : (TCO 1) The first exchange to become a publicly traded company was the
_____.
: New York Stock Exchange
Chicago Board of Trade
NASDAQ Stock Market
Chicago Mercantile Exchange
Comments:
Question 8. Question : (TCO 1) The _____ is the tax rate that applies to each new dollar of income.
: average tax rate
short-term capital gains tax rate

long-term capital gains tax rate
marginal tax rate
Comments:
Question 9. Question : (TCO 1) The index which gives equal weight to every company included, and is
therefore not dominated by any single company, is the _____.
: Dow Jones Composite Average
Standard & Poor's 400 Index
Value Line Average
American Stock Exchange Index
Comments:
Question 10. Question : (TCO 1) The success of a short investment position depends on _____.
: a level stock price
a declining stock market
an increasing stock price
declining interest rates
Week 2 quiz
(TCO 2) The primary purpose of fundamental stock valuation is to _____.
: eliminate stocks of those companies that are potential losers from the portfolio
identify for purchase those companies that are fundamentally undervalued
learn to identify peaks and troughs of the business cycle
All of the above
Question 2. Question : (TCO 2) Some of the major leading indicators would be _____.

: money supply (M2), consumer expectations, and stock prices (S&P 500)
personal income, employees on nonagricultural payrolls, and industrial production
average prime rate charged by banks, labor cost per unit of output, and commercial and industrial
loans outstanding
All of the above
Question 3. Question : (TCO 2) In which stage of the industry life cycle are companies likely to be
privately owned?
: Development
Maturity
Decline
Expansion
Question 4. Question : (TCO 2) The crossover point on the life cycle curve is the point where _____.
: the company issues stock in an initial public offering (IPO)
the company gets listed on an organized exchange
the company's industry moves from the growth stage to the expansion stage
the industry's products begin to be accepted by the marketplace
Question 5. Question : (TCO 2) Which of the following statements about stock valuation based on
asset value is NOT true?
: Natural resources often give a company value, even if an income stream is not produced.
The value of the assets may not even appear on the balance sheet.
Current assets are usually excluded from the valuation process, since they will be used up in the next
business cycle.
Hidden assets can add substantial value to the firm.
Question 6. Question : (TCO 2) The primary difference between dividend valuation models and
earnings valuation models is _____.
: selecting the appropriate discount rate
dividends are not considered in earnings models
whether the investor's income stream or the firm's income stream is measured
More than one of the above
Question 7. Question : (TCO 2) P/E ratios are influenced by a company's _____.
: growth rate
risk
capital structure
All of the above
Question 8. Question : (TCO 2) The major device for measuring the profitability of a firm over a
defined period of time is the _____.
: income statement
balance sheet

statement of cash flows
None of the above
Comments:
Question 9. Question : (TCO 2) Asset-utilization ratios measure _____.
: productivity of fixed assets in terms of sales.
the relationship of sales on the income statement to various assets on the balance sheet.
the firm's ability to pay off short-term obligations as they come due.
All of the above
Question 10. Question : (TCO 2) _____ ratios measure the impact of external market forces on the
internal performance of a firm.
: Price
Profitability
Liquidity
Asset-utilization
Week 3 quiz

(TCO 3) When viewing the terms "special returns” or “abnormal returns,” we know this can refer to
_____.
: the Efficient Market Hypothesis
gains in excess of the market risk-adjusted average
convertibles and warrants, etc.
Question 2. Question : (TCO 3) Legal methods for attempting to profit through mergers and
acquisitions include all of the following, except identifying _____.
: an insider close to the information
candidates through financial or operating characteristics
securities which are undergoing unusual volume or pricing patterns
industries where companies are being absorbed
Question 3. Question : (TCO 3) An acquisition may be canceled because of any of the following e xcept
_____.
: antitrust action
an unusually high premium on stock price
a lawsuit brought by stockholders
disapproval of the target company's management
Question 4. Question : (TCO 3) New stock issues are considered a special investment situation,
because _____.
: they exhibit a very good long-term investment potential
the spread is greater than that in the secondary market
there is some evidence that new issues are underpriced
Question 5. Question : (TCO 3) Research on the strong form shows that _____ are able to achieve
superior returns.
: members of the SEC
corporate insiders and public officials
market specialists and corporate insiders
the majority of professional mutual fund managers
Question 6. Question : (TCO 3) According to the Dow Theory, daily fluctuations and secondary
movements in the market are used to help identify _____.
: a key indicator
a primary trend
shifts in demand and supply
Question 7. Question : (TCO 3) All of the following are smart money rules except ¬_____.
: investment advisory recommendations

short sales by specialists
Barron's Confidence Index
None of the above
Question 8. Question : (TCO 3) A low Barron's Confidence Index means that _____.
: investors prefer stocks to bonds
the yield on bonds is greater than that on stock
low-quality bonds have returns much higher than high-quality bonds
low-quality bonds have returns slightly higher than high-quality bonds
Question 9. Question : (TCO 3) The problem in reading charts has always been _____.
: with the errors that are frequently made in the graphing process
understanding the past market movements
in analyzing the patterns in such a fashion that they truly predict stock market movements before
they unfold
None of the above
Question 10. Question : (TCO 3) Smart money rules or approaches to the market include _____.
: short sales by specialists
the put-call ratio
investment advisory recommendations
the odd-lot theory

Week 4 quiz
(TCO 4) The most important feature of municipal bonds is _____.
: the wide range of denominations and maturities
that the interest is not taxable by the federal government
the risk-free nature of this investment
its appeal to investors needing growth
Question 2. Question : (TCO 4) For the major bond-rating agencies, the lowest level of an investment
grade bond is _____.
: AA (investment grade includes AAA and AA)
A (investment grade includes AAA, AA, and A)
BBB (investment grade includes AAA, AA, A, and BBB)
B (investment grade includes AAA, AA, A, BBB, BB, and B)
Question 3. Question : (TCO 4) A corporate bond quoted at 108.25 is selling for _____.
: $108.25
$1,082.50
$10,825
None of the above
Question 4. Question : (TCO 4) Assume a $1,000 treasury bill is quoted to pay 7% interest over a
three-month period. What will be the price of the treasury bill?
: $982.50
$980
$970
$980.50
Question 5. Question : (TCO 4) When should an investor calculate both yield to maturity and yield to
call?
: An investor should calculate both yield to maturity and yield to call whenever there is a call
provision.
An investor should calculate both yield to maturity and yield to call when the sum of the present
values of the interest payments exceeds the call price.
An investor should calculate both yield to maturity and yield to call when the market price is greater
than or equal to the call price.

An investor should calculate both yield to maturity and yield to call whenever the funds can be
reinvested.
Question 6. Question : (TCO 4) What will happen to the market value of a bond if interest rates
increase?
: The market value will decrease.
The market value will increase.
The market value will increase or decrease, depending on the general economic climate .
The market value should remain level.
Question 7. Question : (TCO 4) Short-term interest rates have _____ volatility in comparison to long-
term interest rates.
: much less
more
equal
slightly less
Question 8. Question : (TCO 4) The duration of a bond is determined by a combination of the maturity
date and value, and _____.
: the pattern of coupon payments
the call premium
the put premium
None of the above
Question 9. Question : (TCO 4) Factors which influence the relationship between duration and
maturity include all of the following EXCEPT _____.
: the face value of the bond
the coupon rate of the bond
the number of years to maturity
None of the above
Question 10. Question : (TCO 4) The duration on an 8%, 25-year bond is _____ the duration on a
9%, 30-year bond.
: greater than
less than
equal to
There is not enough information to tell

Week 5 quiz
(TCO 5) When is the best time to convert a convertible bond to common stock?
: The best time to convert is when the call price exceeds the conversion value.
The best time to convert is after the conversion ratio decreases.
The best time to convert is when the conversion value is below the pure bond value.
None of the above
Question 2. Question : (TCO 5) Which is the conversion ratio of a $1,000 bond convertible at $25.50
per share? The coupon rate is 10% and the market rate 12%. This company's common stock is
currently trading at $22 per share.
: 45.45 shares
39.22 shares
80 shares
21.1 shares
Question 3. Question : (TCO 5) A put is said to be "in-the-money" when the strike price is _____ the
market price.
: equal to
greater than
less than
Question 4. Question : (TCO 5) A major disadvantage of using call options to hedge a short position is
that _____.
: hedging increases the risk of loss on the short sale.
the option premium and commission reduce profit potential.
the price of the stock may go up
None of the above
Question 5. Question : (TCO 5) A straddle is a combination of a put and call on _____.
: the same stock, with the same strike price and expiration date.
different stocks, with the same strike price and expiration date.

different stocks, with different strike price and expirations dates.
the same stock, with the same the strike price and different expiration dates.
Question 6. Question : (TCO 5) An agreement which provides for the delivery of a given amount of
something at a given time in the future, at a given price is called a(n) _____contract.
: futures
seasonal
options
None of the above
Question 7. Question : (TCO 5) The primary difference between options and futures is that _____.
: the option premium is the full liability of the purchaser, while a futures contract may call for
additional margin to hold the position
options are more speculative than futures
futures require the physical transfer of goods, while options do not
Question 8. Question : (TCO 5) The value of a stock index futures contract is the product of _____
and the appropriate multiplier.
: the settle price
the change in the settle price
the difference between the settle price and the change
None of the above
Question 9. Question : (TCO 5) Which of the following statements about hedging a stock portfolio with
stock index futures is NOT true?
: Futures contracts magnify gains (or losses) on the stock portfolio.
In a declining market, futures contracts help offset losses on the portfolio.
A risk-taker would probably not hedge the entire portfolio with stock index futures.
None of the above
Question 10. Question : (TCO 5) The settle price shown in a stock index futures table is the _____.
: highest price the contract hit during the day
closing price for the contract at the end of the day
price for the contract only for the last day of the contract
None of the above

Week 7 quiz
Question 1. Question : (TCO 7) According to the text, a risk-averse investor _____.
: demands a premium for assuming risk
will only participate in low-risk or risk-free investments
is one of a small minority in the United States
Question 2. Question : (TCO 7) Under Markowitz's theory, the ideal portfolio for an investor is
represented by _____.
: the point of tangency between the efficient frontier and the investor's indifference curve
the highest possible indifference curve
the highest possible point on the efficient frontier
None of the above
Question 3. Question : (TCO 7) Systematic risk is rewarded with a premium in the marketplace
because _____.
: risk is particular to the stock or industry
it represents a random occurrence which could not have been foreseen
it is associated with market movements that cannot be eliminated through diversification
None of the above
Comments:
Question 4. Question : (TCO 7) Which of the following are assumptions of the capital asset pricing
model?
: Funds can be borrowed or lent in unlimited quantities at a risk-free rate.
The objective of all investors is to maximize their expected utility over the same one-period
timeframe, using the same basis for evaluating investments.
There are no taxes or transaction costs associated with any investment.
All of the above
Question 5. Question : (TCO 7) A good way to minimize risk and receive an optimum return on your
portfolio is _____.
: through diversification

to buy only risk-free securities
through blue-chip stock purchases only
through junk-bonds
Question 6. Question : (TCO 7) Assume a portfolio has the possibility of returning 3%, 6%, 11%, or
16%, with the likelihood of 20%, 30%, 25%, and 25%, respectively. The expected value of the
portfolio is _____.
: 8.75%
9.0%
9.15%
9.51%
Question 7. Question : (TCO 7) If the market rate of return is 10% and the beta on a particular stock
is 1.00, the return on the stock will be _____.
: greater than 10%
10%
less than 10%
dependent on some other factor
Comments:
Question 8. Question : (TCO 7) For two investments with a correlation coefficient (rij) greater than
+1, the portfolio standard deviation will be _____ the weighted average of the individual investments'
standard deviation.
: more than
less than
equal to
zero compared to
Question 9. Question : (TCO 7) The capital asset pricing model (CAPM) takes off where the _____
concluded.
: market line
capital market line
efficient frontier and Markowitz portfolio theory
arbitrage pricing theory
Question 10. Question : (TCO 7) Using the formula for the security market line (Formula 21-7), if the
risk-free rate (RF) is 6%, the market rate of return (KM) is 12%, and the beta (bi) is 1.2, compute the
anticipated return for stock i (Ki).
: 20.4%
16.33%
13.64%
13.2%

Objectives
Select an industry and a company within the selected industry to complete a comprehensive
analysis. Develop a well-written paper focusing on fundamental and technical research. The goal is to
obtain a better understanding of the financial analysis process by studying public information and
market data to make informed investment decisions.
Course Project Criteria
Course Project Progression: Review the recommended milestones in the weekly Assignment tabs
towards completing your Course Project, which is due Week 6.
Course Project Submission: Your Course Project is due Week 6. Please submit your assignment to
the Course Project Dropbox located in Week 6 (150 points). Late papers will not be accepted. You
need to work on your Course Project as we move through the course, and I need adequate time to
read and grade each paper to give it the attention it deserves.
Course Project Requirements: Your Course Project consists of valuing a firm using fundamental
and technical analyses and presenting your investment recommendation. Your course project will
consist of a 5-6 page paper following APA format and will include at least one graphic (refer to the line
chart under technical analysis below). The project should include a title page, introduction, analysis,
graphic(s), conclusion, and reference page.
Fundamental Analysis: You will prepare a top-down fundamental analysis that covers economic,
industry, company, and financial analysis (Chapters 5, 6, 7, 8). The analysis should parallel the type
of analysis conducted by a professional security analyst (although not with the same degree of rigor).
 Economic analysis (Chapter 5): Your paper must cover curr
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