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FIRST QUIZ FNCE 238/738 September 14, 2016
WRITE ALL ANSWERS ON THE TEST. IF YOUR ANSWER CONTINUES ON THE BACK, MAKE A NOTE OF IT ON THE FRONT.
45 PTS / 25 MINUTES NAME:_____________________________________________ SECTION (12, 1:30 or 3):__________________________________
1.
(20 pts total) [
don’t worry about accrued interest for this question
] In August, Verizon issued a note with a 2.625% coupon, $2.25 Billion face value, maturing 8/15/26. On September 13, 2016, this note was trading at 97.275 bid, 97.893 asked. Suppose Verizon wanted to defease
this note, which means to purchase a portfolio of Treasury securities that replicates the cash flows of its own note, and then arrange for the cash flows from the portfolio to pay off the note. Here are the contemporaneous quotes for two Treasury securities maturing on the same date: maturity coupon bid ask ask yield August 15, 2026 1.50% 97.984 98.000 1.72% August 15, 2026 6.75% 146.359 146.422 1.65% a.
(5 pts) What is the portfolio of the Treasury securities that exactly replicates the cash flows of $100 principal amount of the Verizon security? b. (5 pts) How much would it cost Verizon to defease this $2.25 Billion note?
c. (5 pts) Which would you expect to have the higher dollar duration (i.e. DV01), the 1.5% security or the 6.75% security? Explain (briefly) d. (5 pts) The yield to maturity of the 1.50% security is higher than the yield to maturity of the 6.75% security. Briefly, what exactly does it mean for the yield to maturity of one security to be higher than the yield to maturity of another?
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2. (10 pts total) Suppose you buy $100MM principal amount of the Verizon note from question 1, and you want to finance this purchase. a.
(5 pts) The standard margin for repo of an investment-grade corporate like this note is 5%. At these terms, how many dollars would you have to come up with yourself for the purchase, rather than borrow in the repo market?
b.
(5 pts) In words, what is the exposure of your repo counterparty to changes in the Verizon bond’s yield? Explain (briefly)
3.
(15 pts total) From a 6/28 speech by SEC chief of staff Andrew Donohue In 2010, for example, the Commission adopted the first set of pivotal reforms that reduced money market funds’ credit risk exposure, required liquidity buffers, and increased disclosure to the Commission and to investors, among other things. Four years later, the Commission adopted structural and operational reforms to address risks of investor runs in money market funds, while preserving the benefits of the funds and supporting capital formation. Among other things, those reforms require a floating net asset value (NAV) for institutional prime money market funds, and provide non-government money market fund boards new tools – liquidity fees and redemption gates – to address runs. Can these reforms and tools deter money-fund runs from starting? Explain.
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What are the future value and the interest earned if $4000 is invested for 3 years at 8% compounded quarterly? (Round your answers to the nearest cent.)
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Thursday : January 21, 2021 --- 80 Minutes
1. In this section we examine three theories of investor preference: The dividend irrelevance
theory. The "bird in the hand" theory, the tax preference theory, which theory is the best?
What is the different of stock dividends, stock splits, and stock repurchase.
2. In the working capital management, we know about cash conversion cycle model. For
problem if average inventories are $3 million and sales are $11 million. If receivables are
S 657.535 and sales are S 11 million. Then, if its cost of goods sold are $9 million per year
and if its accounts payable average $ 657.535. What is the length of the cash conversion
sicle?
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OA. $18,200
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Buddy Company uses the allowance method to account for uncollectible receivables. At the beginning of the year,
Allowance for Bad Debts had a credit balance of $800. During the year Buddy wrote off uncollectible receivables of
$2,100. Buddy recorded Bad Debts Expense of $2,800. Buddy's year-end balance in Allowance for Bad Debts is
$1,500. Buddy's ending balance of Accounts Receivable is $20,300. Compute the net realizable value of Accounts
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Concord Industries has equivalent units of 7100 for materials and for conversion costs. Total manufacturing costs are $124370. Total
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O $17.52.
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You deposit $850 in an account paying an annual simple interest rate of 7.8%. Find the future value of the investment (in dollars) after 1 year.
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Calculate the simple interest due (in dollars) on a 40-day loan of $1,600 if the annual interest rate is 9%. (Use 360 days in 1 year.)
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A process with no beginning work in process, completed and transferred out 85200 units during a period and had 50100 units in the
ending work in process inventory that were 20% complete. The equivalent units of production for the period for conversion costs were:
O 95220 equivalent units.
O 135300 equivalent units.
O 70200 equivalent units.
O 85200 equivalent units.
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Salma wants to save money to open a tutoring center. She buys an annuity with a monthly payment of $27 that pays 3.7% interest, compounded
monthly. Payments will be made at the end of each month. Find the total value of the annuity in 10 years.
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Fighting Irish Incorporated pays its employees $3,360 every two weeks ($240/day). The current two-week pay period ends on
December 28, 2024, and employees are paid $3,360. The next two-week pay period ends on January 11, 2025, and employees are
paid $3,360.
Required:
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2. Calculate the 2024 year-end adjusted balance of Salaries Payable (assuming the balance of Salaries Payable before adjustment in
2024 is $0).
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throughout December, January, and February. Prepaid Advertising was debited on December 1.
3. Employee salaries for the month of December totaling $7,300 will be paid on January 7, 2025.
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Record the necessary adjusting entries for Shocker at December 31, 2024. No adjusting entries were made during the year. (If no
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Consider the following situations for Shocker:
1. On November 28, 2024, Shocker receives a $3,450 payment from a customer for services to be rendered evenly over the next
three months. Deferred Revenue was credited on November 28.
2. On December 1, 2024, the company paid a local radio station $2,490 for 30 radio ads that were to be aired, 10 per month,
throughout December, January, and February. Prepaid Advertising was debited on December 1.
3. Employee salaries for the month of December totaling $7,300 will be paid on January 7, 2025.
Hint
Required:
Record the necessary adjusting entries for Shocker at December 31, 2024. No adjusting entries were made during the year. (If no
entry is required for a particular transaction/event, select "No Journal…
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joint income tax return with Dena. Dena had $0 gross income. Their earned income credit for the year is:
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Ob. $0.
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142,700
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Table of Contents > Week 9: Operational and legal Considerations > Lecture Notes > 09 Operational and Legal Considerations
09 Operational and Legal Considerations -
>
Calculating Capacity
• How many machines do you need?
• You expect your sales to be
3,000,000 granola bars (20g each)
• How large is your plant?
per month
• How many workers do you need?
The machine:
• How much is the investment?
Capacity: 100 kgs per hour
• What are the operating costs?
Requires 2 people to operate it
Takes 8 ft x 40 ft space
• Cost per machine $15,000
Energy and maintenance: $5 per hour
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On Chapters 9, 10, and 11:
The YuRaeKa charity was established in 1960. The charity’s aim is to provide support to children from disadvantaged backgrounds who wish to take part in sports such as tennis, badminton, squash, basketball and football.
YuRaeKa has a detailed constitution[1] which explains how the charity’s income can be spent. The constitution also notes that administration expenditure cannot exceed 10% of income in any year.
The charity’s income is derived wholly from voluntary donations. Sources of donations include:
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Ayayai Mowers Ltd. agreed to sell the City of Halifax four riding mowers and 20 push lawn mowers. The contract price was $72,00O.
Ayayai normally sells its riding mowers for $14,400 and its push lawn mowers for $960. The contract required the City of Halifax to
pay Ayayai once all of the merchandise has been delivered to the city's public works yard. Ayayai's management does not expect any
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Ayayai delivered all four of the riding mowers and 14 of the push mowers on April 26. The remaining six push mowers were delivered
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- P7arrow_forwardQuiz 4: Module 4- Requires Respondus L Started: Nov 16 at 6:41am Quiz Instructions Quiz 4 covers the content from Module 4. The quiz has a 45-minute timer t question at a time but you can go back and change your answers if you nee Quiz answers can be viewed for 72 hours after the final due date, Be sure to Question 17 An anecdote is a type of analogy | metaphor Sumile comparison example Previousarrow_forwardMc Graw Hill M Question 5 - Week 11 - Homework #7 (100 points) - Connect Week 11 - Homework #7 (100 points) 110 ezto.mheducation.com bSuccess Confirmation of Question Submission | bartleby Saved 10 5 points eBook Fighting Irish Incorporated pays its employees $3,360 every two weeks ($240/day). The current two-week pay period ends on December 28, 2024, and employees are paid $3,360. The next two-week pay period ends on January 11, 2025, and employees are paid $3,360. Required: 1. Record the adjusting entry on December 31, 2024. 2. Calculate the 2024 year-end adjusted balance of Salaries Payable (assuming the balance of Salaries Payable before adjustment in 2024 is $0). Print Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Calculate the 2024 year-end adjusted balance of Salaries Payable (assuming the balance of Salaries Payable before adjustment in 2024 is $0). Ending balance hwo to ss on macbook - Google Search Help Save & Exit…arrow_forward
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Fundamentals of Financial Management (MindTap Cou...
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Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
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ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education