HFT 4464 Exam 2 Review.

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Presentation transcript:

HFT 4464 Exam 2 Review

Exam 2 Covers the Following Chapters Time Value of Money Chapter 6 Fixed Income Securities Chapter 7 Common Stock

All Chapters Vocabulary Examples Indenture Par Value Amortization Schedule Senior / Junior; Subordinated / Unsubordinated Perpetuities Annuities Cumulative Preferred Stock Common Stock Features

Bond Market Rate vs. Coupon Rate What is the relationship ? Market Rate > Coupon Rate Bond Value is ? Par Value Market Rate = Coupon Rate Market Rate < Coupon Rate Bond Value is ? Par Value

Problems Future value of a lump sum investment Table p.91 Present value of a lump sum payment Table p. 93 Future value of a series of payments made Table p. 96 Present value of a series of payments received Table p. 102

Problems Yield to maturity of a bond Value of preferred stock Based on purchase price Includes zero coupon bonds Value of preferred stock V = D / I Common stock value based on dividend growth

Problems Bond Valuation (Chapter 6) Bond Yield to Maturity Valuing Common Stock based on dividend growth rates

Other Items Copies of present / future values will be required. Bring your textbook or table copies. Bring your own calculator!!! There will be none provided !!! Cell phones may not be used. Calculators may not be shared during the exam. If you do not have one, you will need to return your exam & wait until you can borrow one! The exam still must be completed in the allotted time ( 6:00 to 7:15 pm) You may use a financial calculator if you have one. Scratch paper will be provided & must be turned in with exam. Scantron form (brown) must be used! Failure to do so may result in a delay in providing exam results. Bring your own forms. Extras will not be available!