Round 8 #1 Homework #4A (Bond Current Yield) A $1,000 par value bond with a 18.76 percent coupon rate, currently selling for $1,067, has a current yield of ____ Round the answer to the decimal places in percentage form Your Answer #2Homework #4C (Value of the Bond Semi-Annually) Flower Valley Company bonds have a 9.37 percent coupon rate. Interest is paid semiannually. The bonds have a par value of $1,000 and will mature 21 years from now. Compute the value of Flower Valley Company bonds if investors’ required rate of return is 9.27 percent. Round the answer to two decimal places. Your Answer: #3Homework #4D (YTM annually, semi-annually) Blue Crab, Inc. plans to issue new bonds, but is uncertain how the market would set the yield to maturity. The bonds would be 29-year to maturity, carry a 8.02 percent annual coupon, and have a $1,000 par value. Blue Crab, Inc. has determined that these bonds would sell for $1,191 each. What is the yield to maturity for these bonds? Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box). You should use Excel or financial calculator. Your Answer: #4Homework #4E (zero-coupon bond) 27 years ago, Mini Max Inc. issued 30 year to maturity zero-coupon bonds with a par value of $1,000. Now the bond has a yield to maturity of 12.27 percent, compounded semi-annually. What is the current price of the bond? Round the answer to two decimal places. Your Answer: #6Homework #4G (Bonds Quotes) Assume that today's date is April 15, 2015. Fresh Bakery Inc. bond is an annual-coupon bond. Par value of the bond is $5,000. Calculate annual coupon interest payments.  The answer should be calculated to two decimal places Company Price Coupon Rate Maturity Date YTM Current Yield Rating Fresh Bakery 96.829 9.114 04-15- 2024 - - AA Your Answer: #7 Homework #5A (Value and Expected rate of return on preferred stock) UPS preferred stock pays $6 in annual dividend. If your required rate of return is 7.37 percent, how much would you be willing to pay for one share of this preferred stock Round the answer to two decimal places Your Answer #8Homewok #5B (Value of Common Stock, Expected Rate of return on Common Stock) You are considering the purchase of a share of Alfa Growth, Inc. common stock. You expect to sell it at the end of one year for $64.09 per share. You will also receive a dividend of $3.90 per share at the end of the next year. If your required return on this stock is 9.02 percent, what is the most you would be willing to pay for Alfa Growth, Inc. common stock now? Round the answer to two decimal places. Your Answer: #9Homework #5C (CAPM, Beta portfolio, Portfolio expected return) You hold a portfolio with the following securities: Security Percent of portfolio Return Stock A 47% -4.3% Stock B 20% 4.4% Stock C Please calculate it 5.4% Calculate the expected return of portfolio.Round the answers to two decimal places in percentage form. (Write the percentage sign in th ...

1. Round 8
#1 Homework #4A (Bond Current Yield)
A $1,000 par value bond with a 18.76 percent coupon rate,
currently selling for $1,067, has a current yield of ____
Round the answer to the decimal places in percentage form
Your Answer
#2Homework #4C (Value of the Bond Semi-Annually)
Flower Valley Company bonds have a 9.37 percent coupon rate.
Interest is paid semiannually. The bonds have a par value of
$1,000 and will mature 21 years from now. Compute the value
of Flower Valley Company bonds if investors’ required rate of
return is 9.27 percent.
Round the answer to two decimal places.
Your Answer:
#3Homework #4D (YTM annually, semi-annually)
Blue Crab, Inc. plans to issue new bonds, but is uncertain how
the market would set the yield to maturity. The bonds would be
29-year to maturity, carry a 8.02 percent annual coupon, and
have a $1,000 par value. Blue Crab, Inc. has determined that
these bonds would sell for $1,191 each. What is the yield to
maturity for these bonds?
Round the answers to two decimal places in percentage form.
(Write the percentage sign in the "units" box).
You should use Excel or financial calculator.
Your Answer:
#4Homework #4E (zero-coupon bond)
27 years ago, Mini Max Inc. issued 30 year to maturity zero-
coupon bonds with a par value of $1,000. Now the bond has a
yield to maturity of 12.27 percent, compounded semi-annually.
What is the current price of the bond?
Round the answer to two decimal places.

2. Your Answer:
#6Homework #4G (Bonds Quotes)
Assume that today's date is April 15, 2015. Fresh Bakery Inc.
bond is an annual-coupon bond. Par value of the bond is $5,000.
Calculate annual coupon interest payments. The answer should
be calculated to two decimal places
Company
Price
Coupon Rate
Maturity Date
YTM
Current Yield
Rating
Fresh Bakery
96.829
9.114
04-15- 2024
-
-
AA
Your Answer:
#7 Homework #5A (Value and Expected rate of return on
preferred stock)
UPS preferred stock pays $6 in annual dividend. If your
required rate of return is 7.37 percent, how much would you be
willing to pay for one share of this preferred stock
Round the answer to two decimal places
Your Answer

3. #8Homewok #5B (Value of Common Stock, Expected Rate of
return on Common Stock)
You are considering the purchase of a share of Alfa Growth,
Inc. common stock. You expect to sell it at the end of one year
for $64.09 per share. You will also receive a dividend of $3.90
per share at the end of the next year. If your required return on
this stock is 9.02 percent, what is the most you would be willing
to pay for Alfa Growth, Inc. common stock now?
Round the answer to two decimal places.
Your Answer:
#9Homework #5C (CAPM, Beta portfolio, Portfolio expected
return)
You hold a portfolio with the following securities:
Security
Percent of portfolio
Return
Stock A
47%
-4.3%
Stock B
20%
4.4%
Stock C
Please calculate it
5.4%
Calculate the expected return of portfolio.Round the answers to
two decimal places in percentage form. (Write the percentage
sign in the "units" box).
Your Answer:

4. ACCT525
Week 2 Assignment
Read “New IASB Leader Embraces Challenges” which can be
accessed through the DeVry online library. Choose a country
that has already adopted IFRS. In 2-3 pages (12-pt type,
double-spaced) answer the following questions:
1. Describe the process that your selected country went through
to adopt IFRS, such as how long it took for the country to fully
adopt IFRS.
2. Did the country adopt IFRS or did they make changes to
IFRS to adapt to their country’s culture or regulations?
3. Has IFRS adoption made it easier for companies in that
country to access the capital markets?
4. Based on your research regarding your selected country,
should the US SEC mandate adoption of IFRS? Why or why
not?
5. What is your personal opinion regarding whether the US SEC
should mandate the adoption of IFRS?
Section:
FINANCIAL REPORTING/INTERNATIONAL
An interview with Chairman Hans Hoogervorst

5. With more than 100 countries already using IFRS, a full
standard-setting agenda and the SEC poised to decide in the
coming months whether U.S. public companies will report under
international standards, Hans Hoogervorst knows his challenges.
But the second chairman of the International Accounting
Standards Board (IASB) is no stranger to challenging financial
leadership positions and public service. Most recently he served
as chairman of the executive board of the Netherlands'
Authority for the Financial Markets (a regulator comparable to
the SEC in the U.S. but with broader authorities) and chaired
the International Organization of Securities Commissions'
(IOSCO) technical committee.
Before taking the reins of the decade-old international standard
setter in July, Hoogervorst had extensive involvement with the
board as co-chair of its Financial Crisis Advisory Group and
chair of the IFRS Foundation Monitoring Board, whose
membership is made up of financial market regulators including
SEC Chairman Mary Schapiro.
Between 1998 and 2007 he held a number of positions in the
Dutch government, including minister of finance, minister of
health, welfare and sport, and state secretary for social affairs.
He also spent three years as a banking officer for the National
Bank of Washington in Washington.
CHALLENGES
Despite the adoption of IFRS by dozens of countries (including
all members of the European Union), the U.S. and some other
key economic powers such as India and Japan have not yet fully
adopted international standards.
"If we get all those countries on board … then IFRS will be
truly a global standard, and I think there's a great chance of
achieving that in the next couple of years," Hoogervorst said.
"What I would see as the second and related challenge is to
achieve consolidation of all the progress that has been made in
the last decade."
This consolidation of progress, he said, involves strengthening
the IASB as an organization and improving its standards. "I

6. think that we need to strengthen the infrastructure of the
organization, the sense of ownership around the world and
relationships with other authorities with responsibility for
elements of the global financial system."
On standard setting, Hoogervorst said, the focus needs to be on
reducing complexity and improving consistency. "I think that
whatever our future agenda is going to look like, we'll need to
work on the conceptual framework to improve the consistency
of the underlying philosophy of our standards."
POLITICAL VERSUS TECHNICAL
Although he's not an accountant, Hoogervorst doesn't plan to
shy away from technical issues. "I don't think it is possible to
split the policy from the technical," he said. "I cannot lead this
organization if I don't get on top of the standards … and I look
forward to that, because I find it intellectually very challenging
to do."
He does, however, intend to make full use of Vice-Chairman Ian
Mackintosh, who also joined the board in July after heading the
U.K. Accounting Standards Board.
"We have so much work ahead of us, it is more than one person
at the top can do, especially the extent of the global outreach
that we have to do," he said. "So I will share that with Ian, and
also the internal management of our organization."
SEC'S IFRS TRANSITION FRAMEWORK
On the so-called "condorsement" approach to IFRS transition
floated by the SEC staff in May (see "Beyond Convergence,"
JofA, Aug. 2011, page 46), Hoogervorst responded positively.
"If you look at it carefully, I think it is very clear that the SEC
is still very much on track for a decision on IFRS later this
year, and I believe it will be a positive position, and everything
is pointing in that direction."
He also pointed out that the SEC staff's concept of establishing
FASB as an endorsement body for IASB standards in the U.S.
"is not all that different from how other countries adopt IFRS."
Hoogervorst does see potential objections to the approach based
on its complexity but said "it will work itself out in practice."

7. U.S. ADOPTION "OPTION"
On U.S. adoption of IFRS, Hoogervorst acknowledges that all
U.S. public companies may not be ready for it. "I have no inside
knowledge, but if I was the SEC, I would start with the larger
U.S. companies, particularly those who are internationally
orientated. If that means providing an option for those
companies to voluntarily adopt at an earlier stage, I think then
we would already have gained a lot. This would provide the
necessary momentum for the remaining listed companies to
adopt at a later stage."
Hoogervorst made it clear that he believes that most U.S.
companies want the SEC to mandate a clear time frame for the
bigger companies and the possibility of voluntary adoption. On
the question of whether the SEC simply giving U.S. public
companies the option to adopt IFRS without a mandate would be
a step in the right direction, he was unequivocal.
"That would be very positive indeed, because we know that a lot
of international-orientated companies would like to have that
option, and once they have crossed the bridge, others will
follow. It's not sufficient in the medium to long term, but it
would be a very good beginning."
PREPARING FOR ADOPTION
Hoogervorst said the main lesson learned from other IFRS
adoptions around the world is that "everybody can do it." "If
you look at the Americas, Argentina, Brazil, Canada, Chile,
Ecuador, Mexico are all switching to IFRS. These are major
trading partners with the United States, and in the case of Brazil
one of the major economies now driving global growth.
Businesses can deal with the transitional arrangements given
sufficient time and a clear and unambiguous decision."
"If you give them clarity, clear dates, a clear commitment, they
will get the job done," he said.
Not to miss an opportunity to promote the benefits of IFRS,
"what you would expect intuitively," he added, "is that
academic research has demonstrated that yes, indeed, because of
increased comparability, increased reliability of accounting

8. standards, the cost of capital has come down in countries
adopting IFRS, and that even goes for advanced economies with
well-developed accounting standards, such as the United
Kingdom."
RISK OF NONCOMMITTAL U.S.
When asked what would happen if the U.S. did not commit to
using IFRS, Hoogervorst appeared genuinely surprised. "You
know, it is truly hard to imagine," he said. "What is clear is that
there's only one set of accounting standards that has a chance to
become the global language, and that is IFRS."
He believes an SEC decision this year against incorporating
IFRS would simply delay the inevitable and reduce U.S.
involvement in the IFRS due process.
"Suppose there was a truly negative decision at the end of the
year, it is highly unlikely that we would have the international
support for a new convergence program or the very close,
almost exclusive relationship we have with the FASB at this
moment," he said. "That would all end."
"I simply don't think it's in the American interest for that to
happen. It's not in the interest of FASB for that to happen. It's
not in the interest of the U.S. business community for that to
happen. … The United States has always been a leader in
international financial reporting. For decades, U.S. GAAP was
the gold standard of financial reporting. For the last decade, the
U.S. has been highly influential in the development of IFRS.
Why would the U.S. choose to give up this leadership position,
especially given the nine years' worth of effort that has already
been put into bringing IFRS and U.S. GAAP into alignment?"
XBRL
Citing positive feedback from the investor community,
Hoogervorst supports the IFRS Foundation's commitment to
advancing XBRL technology, but he cautions that XBRL needs
to be kept in perspective as a technical tool.
"Investors say, 'Yes, it is a very useful tool. Please go on with
your activities in this respect. But please make sure that it
remains a technical tool and that it does not determine the

9. direction of your standard setting.'"
"So our standard setting should not be driven by XBRL, but the
other way around.
And if we keep that order, then I think it is a very useful
technical tool."
To that end, he said the IFRS Foundation is working to improve
the IFRS XBRL taxonomy so that it's easier to use and also
eventually will allow XBRL filings of IFRS financial statements
via the SEC's electronic filing system.
"I know it's still currently not yet possible for the SEC to accept
XBRL filings in IFRS, and for that reason, both the XBRL
teams at the SEC and our Foundation are in frequent contact to
make sure that the IFRS taxonomy does meet SEC
expectations," he said.
RESPONDING TO CRITICS
Hoogervorst responded to a U.K. House of Lords report in
March that suggested IFRS was conducive to "box ticking" and
imprudence during the financial crisis.
"If you look at how IFRS held up during the financial crisis, I
think you can draw two conclusions," he said. "First of all, in
terms of box ticking, I think that the principle-based approach
of IFRSs held up well.
"In terms of prudence, I think we learned one lesson from the
crisis, which is that the incurred loss model resulted in a cliff
effect that discouraged banks to begin impairing when they
should have.
"Both the IASB and the FASB accept we have to develop an
expected loss model which is more forward-looking, and you
might want to call that a little bit more prudent than what we
have now. Although I know that the term prudence is a very
sensitive term, I believe that, you know, if you cannot be sure,
it's better to be safe."
To comment on this article or to suggest an idea for another
article, contact Kim Nilsen, executive editor, at
[email protected] or 919-402-4048.
~~~~~~~~

10. By Matthew G. Lamoreaux, Matthew G. Lamoreaux
([email protected]) is a freelance writer.
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