Questions from Financial Management

Q: The Greenbay Motor Company ordered six German built engines at, €

The Greenbay Motor Company ordered six German built engines at, €15,000 each when the direct exchange rate was $1.2500 per euro, and elected not to cover the obligation with a forward contract. When...

Q: Under what conditions is a bond almost certain to be called at

Under what conditions is a bond almost certain to be called at a particular date in the future? How does this condition affect its price?

Q: Describe the difference between a floating and a fixed exchange rate system

Describe the difference between a floating and a fixed exchange rate system.

Q: How and why do sinking funds enhance the safety of lenders?

How and why do sinking funds enhance the safety of lenders?

Q: Corporate executives sometimes abuse their positions by overpaying themselves at the expense

Corporate executives sometimes abuse their positions by overpaying themselves at the expense of stockholders. When that happens are the executives’ gains dollar for dollar losses to stockholders or c...

Q: Contrast real assets and financial (paper) assets. What is

Contrast real assets and financial (paper) assets. What is the basis for the value of each?

Q: How can two knowledgeable people come to different conclusions about the value

How can two knowledgeable people come to different conclusions about the value of the same security? Can this happen if they have access to the same information?

Q: Describe the nature of a bond. Include at least the following

Describe the nature of a bond. Include at least the following ideas. term/maturity face value debt vs. equity "buying" a bond non-amortized one borrower/many lenders risk conflict with stockhold...

Q: What is a call provision? Why do companies put them in

What is a call provision? Why do companies put them in bonds? Define: call-protected period and call premium/penalty

Q: Two interest rates are associated with pricing a bond. Name and

Two interest rates are associated with pricing a bond. Name and describe each. How are they used? Describe a third rate not used in pricing.