Questions from Corporate Finance


Q: Who prescribes GAAP for U.S. companies?

Who prescribes GAAP for U.S. companies?

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Q: What time-value-of-money formula do we need

What time-value-of-money formula do we need to value a bond?

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Q: Define “perpetuity”.

Define “perpetuity”.

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Q: Describe the difference between positive and negative bond covenants.

Describe the difference between positive and negative bond covenants.

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Q: State the relationship between market rates and bond prices.

State the relationship between market rates and bond prices.

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Q: Calculate the price of the following bond: FV = $1

Calculate the price of the following bond: FV = $1,000; coupon rate = 6 percent, paid semi-annually; market rate = 5 percent; term to maturity = 10 years.

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Q: Describe the relationship between bond interest rate risk and the coupon rate

Describe the relationship between bond interest rate risk and the coupon rate, the market yield, and the term to maturity.

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Q: Summarize the main characteristics of corporations.

Summarize the main characteristics of corporations.

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Q: State the statutory responsibilities of directors that are described in the Canada

State the statutory responsibilities of directors that are described in the Canada Business Corporations Act.

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Q: A bond is currently trading at $841.70. It

A bond is currently trading at $841.70. It has 15 years to maturity. If you require a rate of return of 12 percent, what should be the bond ’ s coupon rate if the bond pays semi‐annual coupons?

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