C214 Final Exam Questions With Complete Solutions
Coupon Rate - ANSWER-The interest rate that a company promises to pay on bonds Market Rate - ANSWER-The interest rate on other comparable bonds Par Value - ANSWER-The amount payable on maturity of the bond Market rate - ANSWER-Same as YTM - Yield to Maturity Gordon Growth Model - ANSWER-Assumes stable growth rates and does not incorporate risk CAPM Model - ANSWER-Allows to determine expected return on stocks and incorporates risk How do public companies maximize shareholder value? - ANSWER-By maximizing Earnings Per Share How do private companies maximize shareholder value? - ANSWER-By keeping control within the company Positive credit rating has what effect on capital? - ANSWER-Lowers cost of capital What is cash flow from operating activities? - ANSWER-It is cash flow generated for sale of products and services What is the formula for retained earnings? - ANSWER-Ending retained earnings=Beginning retained earnings + Net Income = Dividends
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