1. HFT 4464
Exam 2 Review

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

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

4. 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

5. 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

6. 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

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

8. 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!