MIDTERM TEST FINANCIAL INVESTMENT, bài tập môn đầu tư tài chính, đề thi giữa kì môn đầu tư tài chính, BFI 61 NEU Kinh tế quốc dân Part 1: Choose the best answer and EXPLAIN BRIEFLY1. In a severe recession, the major source of risk faced by investors who purchase corporate bonds isA) purchasing power risk.B) interest rate risk.C) liquidity risk.D) default risk.2. The common stock of Robs Discount Furniture is currently selling at 65.20 a share. The company adheres to a 60% dividend payout ratio and has a PE ratio of 19. There are 42,000 shares of stock outstanding. What is the amount of the annual net income for the firm?A) 42,338B) 36,032C) 144,126D) 72,0643. Stocks are a(n) ________ investment representing ________ of a business.A) direct; ownershipB) direct; debtC) indirect; ownershipD) indirect; debt4. If a firm has a 2 million shares outstanding and its stock trades at 25 per share, the company also has 10,000,000 in debt. The companys market capitalization isA) 40,000,000.B) 49,000,000.C) 50,000,000.D) 60,000,000.5. Debt represents funds loaned in exchange forA) dividend income and the repayment of the loan principal.B) dividend income and an ownership interest in the firm.C) interest income and a partial ownership interest in the firm.D) interest income and the repayment of the loan principal.6. Stocks and bonds are traded in A) securities and exchange commissions.B) money markets.C) federal trade commissions.D) capital markets.
MIDTERM TEST FINANCIAL INVESTMENT PART 1D Default risk is the risk that a lender takes on in the chance that a borrower will be unable to make the required payments on their debt obligation A higher level of default risk leads to a higher required return, and in turn, a higher interest rate 2C P/E ratio = (Market price) ÷ (earning per share) 19 = ($65.20) ÷ (earning per share) So, the earning per share is 3.4315 The earning per shares = (Net income) ÷ (Number of outstanding shares) 3.4315 = (Net income) ÷ (42,000 shares) So, the net income is $144,126 3A Stocks are an direct investment representing ownership of a business 4C Market capitalization= No of shares × price per share = 2000000 × $25 = $50000000 5D Debt represents funds loaned in exchange for interest income and the repayment of the loan principal When someone or an institution owe a debt it means that they have a obligation to repayment the principle loan plus the interest income 6D Stocks and bonds are traded in capital markets After being initially issued, bonds and stocks then trade in secondary markets However, there is a key difference between how stocks and bonds are traded on secondary markets: stocks are traded on exchanges while bonds are traded over the counter 7B Bonds are least likely to be called if they are selling at a substantial discount If bonds are selling at a substantial discount it means the company have to pay more and more coupon to the buyers so company are least likely to call bond in this case 8D As a general rule, book values are usually below market values When the market value is less than book value, the market doesn't believe the company is worth the value on its books A higher market value than book value means the market is assigning a high value to the company due to expected earnings increases 9D Sales two years from now: = Sales in year × (1 + Growth of year 1) × (1 + Growth of year 2) = $350,000 × (1 + 5%) × (1 + 5%) = $350,000 × 1.05 × 1.05 = $385,875 Profit margin = 6% of sales two years from now = 0.06 × $385,875 = $23,153 10C The first public sale of a company's stock is called an IPO An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance An IPO allows a company to raise capital from public investors PART Birth month: May 1.The stock market is filled with individuals who know the price of everything, but the value of nothing This is a very popular quote for people to know about securities or investing in general The well known of its come from a truth that investors often suppose the stocks are true value correlate with their price (market value), but this isn't always the case The market can price securities incorrectly Although a stock appears to be a bargain due to its low price, it may not be a good value In other word, people usually care about the price to pay for that stock but most of them can't evaluate a stock is underpriced or overpriced Thus, you should consider very carefully the real value of a stock before decide to pay Going beyond investing area, this word can be applied in lots of other field For example, one of my experience in a grocery store I was making the choice between a deliciously unhealthy snack and a more healthy vegetable In the end, the lower price made me choose the healthy option due to i just have a little money at that time In this case we can realize that the price was higher on the far less valuable food In conclusion, let’s try to distinguish the price from the truly valuable and make careful decisions that will lead to the better outcome not only for our portfolio investment, but for our lives because price is what you pay; value is what you get How has the spread of Covid-19 affected your life and the way you manage your wealth? What should you to maintain and increase your wealth in the“new normal”? The spread of Covid-19 has greatly affected my life and how i manage my wealth Specifically, it has been more than months that I have not been able to go to school due to the pandemic Online learning makes acquiring knowledge more difficult than before Furthermore, I must wear a mask when talking with others and i also have to adopt with staying at home in a long period of time So, my plant to increase my wealth in these days have been stagnant so far I have to quit my part-time job, also tighten my belt and my securities investment have been dropped significantly Fortunately, the epidemic was well controlled, many people have injected the vaccine so i can resume my plant in once day In "new normal" situation, i will try to find a new job and make a significant attempt to improve my score at university Also, when the life becomes normal, the security market will raise correspondently It's a great oppotunity for me to invest in stocks that are on the rise and improve my portfolio In conclusion, my wealth plant can be enhance soon in this "new normal" situation ... month: May 1.The stock market is filled with individuals who know the price of everything, but the value of nothing This is a very popular quote for people to know about securities or investing in... company have to pay more and more coupon to the buyers so company are least likely to call bond in this case 8D As a general rule, book values are usually below market values When the market value... investors often suppose the stocks are true value correlate with their price (market value), but this isn't always the case The market can price securities incorrectly Although a stock appears