2. (30 marks) Module 6 related The following information is taken from recent annual reports and 10-K filings of six publicly traded retailers. All financial information is in $ Millions. Required

Suppose Dillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 face value, a 10% coupon rate, and semiannual interest payments. a) Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell? Suppose that further that the interest rate remained at 6% for the next 8 years. What would happen to the price of the bonds over time? Explain after the issue date (as in part a) interest rates fell to 6%. Suppose

Which of the following bonds has the greatest price risk? a. A 10-year $100 annuity. b. A 10-year, $1,000 face value, zero coupon bond. c. A 10-year, $1,000 face value, 10% coupon bond with annual interest payments. d. All 10-vear bonds have the same price risk since they have the same maturity, e. A 10-year, $1,000 face value, 10% coupon bond with semiannual interest payments.

Assume that a company recorded 30€ more as a depreciation expense: how it would affect the cash flow statement? a. It will increase the cash flow from operating activity by 30 It will decrease the cash flow from operating activity by 30b. It will not affect the cash flow statement -It will increase the cash flow from operating activity by 60

What does it mean when the solvency ratio is 4,5? the company can meet its short-term obligations, but not the long-term obligations. the company may possibly have some underperforming asset. the company is not able to pay its long-term obligations d.the company's indebtedness level is excessive

The FAMA Company has two bond issues outstanding. Both bonds pay $100 annual interestplus $1000 face value at maturity. Bond L has a maturity of 15 years, and Bond S has a maturityof 1-year. What will be the value of each of these bonds when the going rate of interest (yield to maturity)is: A) 8% B) 12% Why does the longer-term (15-year) bond fluctuate more when interest rates change than does the shorter-term bond (1-year)?

a) What are the main characteristics of money market instruments? b) Who are traditionally expected to be the main issuers and holders of money market instruments? How has this changed in recent times? (5 marks) c) The rate of discount is given as d = (R-P)/R.n Where R is redemption value, P is initial price and n is time to redemption If the current rate of discount on treasury bills is quoted at 3 per cent Calculate the price of newly issued 13 week treasury bill, redemption value £500,000 If interest rates stay the same, what will happen to the price as the instrument approaches maturity? (5 marks) What would happen to the price if interest rates rose? Demonstrate by calculating the price were interest rates 4% (5 marks)

a. Consider the Mundel-Fleming (M-L) model with a fixed exchange rate. The exchange rate S is defined as x units of domestic currency for 1 unit of foreign currency, hence,a rise in S implies a depreciation of the domestic currency. In the diagram below, insert labels for the vertical axis, the horizontal axis, the downward sloping line and the upward sloping line. Add the line that indicates the balance of payments (BP), assuming that cross-border capital mobility is limited,and the BP is in surplus (BP>0). How would the BP line change if capital mobility increased? b. The balance of payments is defined as: CA (current account) + K (net capital flows,excluding changes in the central bank's foreign exchange reserves). The exchange rate is fixed and the BP (as defined) is in surplus. How does this affect the central bank's foreign exchange reserves and the money supply? c. What could the central bank do to avoid a change in the money supply? Describe the central bank's actions. d. Consider the main assumptions and policy conclusions of the Monetary Approach to the balance of payments and the Mundell-Fleming model. Which has become obsolete? Which is still relevant today?

Working capital needs.: None of the above is correct.a. b... represent the owner's contributed capital are the funds required to finance the company's operating activity . are the funds required to finance long term investments

Problem 4) A project has four different stakeholders (A, B, C, and D). Each of them has the following possible outcomes based on whether they decide to impede the project (e.g., litigation, refusal to proceed).

11. In the last 5 years the company recoded decrease in sales. The company decides to undertake new investments, which will allow to improve product characteristics and increase sales. The investment amount is 40.000€ and will be financed with a long-term loan.According to the estimations, it is expected that net profit will increase by 7%, sales will increase by 13%, total assets will increase by 4% and own equity will remain the same. What would be the impact of this decision on ROE? ROE will increase due to increase in the financial leverage ROE will decrease due to increase in the financial leverage ROE will increase due to decrease in the financial leverage ROE will remain the same because financial leverage does not affect ROE