TCDNNC (16c)

Financial restructuring can occur as

• a private workout

• an employee buy-out

• a bankruptcy reorganization

• Both a private workout and a bankruptcy reorganization

1. Which of the following statements are correct concerning option values?

(I) The value of a call increases as the price of the underlying stock increases.

(II) The value of a call decreases as the exercise price increases.

(III) The value of a put increases as the price of the underlying stock increases.

(IV) The value of a put decreases as the exercise price increases.

• I and III only

• II and IV only

• I and II only

• II and III only

Answer explanation

• - Giá trị cơ sở càng tăng thì giá trị quyền chọn mua càng tăng, quyền chọn bán giảm.

• - Giá thực hiện càng tăng thì giá trị quyền chọn mua càng giảm, quyền chọn bán càng tăng.

A put option with a $35 exercise price on ABC stock expires today. The current price of ABC stock is $36

• funded

• at the money

• in the money

• out of the money

Answer explanation

at the money là đang hòa vốn

in the money là đang lời

out the money là đang lỗ

1. What is the absolute priority rule of the following claims once a corporation is determined to be bankrupt?

• Administrative expenses, wages claims, government tax claims, debtholder and then equityholder claims

• Administrative expenses, wages claims, government tax claims, equityholder and then debtholder claims

• Wages claims, administrative expenses, debtholder claims, government tax claims and equityholder claims

• Wages claims, administrative expenses, debtholder claims, equityholder claims and government tax claims

The market price of a bond is equal to the present value of the

• face value minus the present value of the annuity payments

• annuity payments plus the future value of the face amount

• face value plus the present value of the annuity payments

• face value plus the future value of the annuity payments

A 12-year, 5% coupon bond pays interest annually. The bond has a face value of  $1,000. What is the change in the price of this bond if the market yield rises to 6% from the current yield of 4.5%?

• 11.11% decrease

• 12.38% decrease

• 12.38% increase

• 14.13% decrease

• 14.13% increase

Answer explanation

với YTM = 4.5% thì PV = 1045.59

YTM = 6% thì PV = 916.16

=> thay đổi  = 916.16/1045.59 - 1 = -12.38%

1. The total rate of return earned on a stock is comprised of which two of the following?

(I) current yield.

(II) yield to maturity.

(III) dividend yield.

(IV) capital gains yield.

• I and II only

• I and IV only

• II and III only

• III and IV only

Answer explanation

Total return = capital gains yield + dividend yield.

Ví dụ là một cổ phiếu mua tại giá 60 và bán tại giá 70 sau 1 năm và trong thời gian đó được trả 2 cổ tức thì capital gains yield = 70/60 - 1 = 16.67% và dividend yield = 2/60 = 3.33%

suy ra total return = 16.67% +3.33% = 20%

Với lại current yield và YTM là dành cho trái phiếu còn đề hỏi stock

JK Inc. is a very cyclical type of business which is reflected in its dividend policy. The firm pays a dividend of $2.00 a share every other year with the last payment having just been paid. Five years from now, the company is repurchasing all of the outstanding shares at a price of $50 a share. What is the current value of one share at a discount rate of 12 percent?

• $34.99

• $31.24

• $34.03

• $33.78

Answer explanation

p = 2/(1.12^2) + 2/(1.12)^4 + 50/(1.12)^5 = 31.24

The linear relation between an investor’s expected return and beta coefficient is the

• reward-to-risk ratio

• portfolio weight

• portfolio risk

• security market line

A portfolio contains four assets. Asset I has a beta of 0.8 and comprises 30% of the portfolio. Asset 2 has a beta of 1.1 and comprises 30% of the portfolio. Asset 3 has beta of 1.5 and comprises 20% of the portfolio. Asset 4 has a beta of 1.6 and comprises the remaining 20% of the portfolio. If the riskless rate is expected to be 3% and the market risk premium is 6%, what is the beta of the portfolio?

• 0.80

• 1.10

• 1.19

• 1.25

Answer explanation

Beta dmuc = 0.8x30% + 1.1x30% + 1.5x20% + 1.6x20% = 1.19