A coupon bond with a 5.5% stated coupon rate that pays semi-annually has a par value of $1,000, matures in 4 years, and is selling today at $1,095. The actual yield to maturity on the bond is

You buy a TIPS bond issued at par for $1,000. The bond pays a 3% annual coupon. Inflation turns out to be 2.5% in the first year and 6% in the second year. The total annual coupon income in year 2 is _______ because you locked in a risk-free ________ return.

You forecast a company will generate $250 million of free cash flow to the firm (FCFF) next year, grow at 5% per year for the following 2 years, and then slow to a long-run, steady state growth rate of 2% thereafter. You estimate a 10% weighted average cost of capital (WACC) and a 12.5% cost of equity. If the company owes $1.0 billion of debt, what is the estimated value of the firm’s total equity?

You buy 50 shares of stock on margin for $500 per share, and post an initial margin of 50%. If the stock rises by 22% over the course of the year and you are charged 9% on the amount you borrowed, what is your rate of return on the trade? (the stock does not pay dividends)

Suppose you buy 100 shares of Apple at $225 per share by posting an initial margin percentage of 50%. If your maintenance margin is 25%, what price per share would trigger a margin call from your lender?

Which of the following is not a characteristic of short selling?

Which option strategy would be best for someone who wants to limit both the upside and downside risk of a position?

Which of the following is true regarding margin trading?

An insurance company has an average duration of liabilities of 3 years. The company plans to fund these liabilities by investing in zero-coupon bonds that mature in 2 years and 5 years. How much of its portfolio should it allocate to the 2-year zero-coupon bonds to immunize if there are no other assets funding the plan?

The free cash flow to the firm is reported as $335 million. The interest expense to the firm is $55 million. If the tax rate is 20%, and the net debt of the firm reduced debt by $75 million, what is the free cash flow to equity holders of the firm?