HFT 4464 Exam 2 Review. Exam 2 Covers the Following Chapters Chapter 5 Chapter 5 Time Value of MoneyTime Value of Money Chapter 6 Chapter 6 Fixed Income.

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Presentation transcript:

HFT 4464 Exam 2 Review

Exam 2 Covers the Following Chapters Chapter 5 Chapter 5 Time Value of MoneyTime Value of Money Chapter 6 Chapter 6 Fixed Income SecuritiesFixed Income Securities Chapter 7 Chapter 7 Common StockCommon Stock

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

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

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

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

Problems Bond Valuation (Chapter 6) Bond Valuation (Chapter 6) Bond Yield to Maturity Bond Yield to Maturity Valuing Common Stock based on dividend growth rates Valuing Common Stock based on dividend growth rates Calculating a Payment Calculating a Payment Common Stock Value for a 1 Year Holding Period Common Stock Value for a 1 Year Holding Period

Other Items Copies of present / future values will be required and provided. You do not need to bring your textbook or table copies. Copies of present / future values will be required and provided. You do not need to 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) 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. You may use a financial calculator if you have one. Scratch paper will be provided & must be turned in with exam. Scratch paper will be provided & must be turned in with exam. Scantron form 2052 (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! Scantron form 2052 (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!