Investments_and_Portfolio_Management_BKM_9th_solutions

《Investments_and_Portfolio_Management_BKM_9th_solutions》由会员上传分享，免费在线阅读，更多相关内容在学术论文-天天文库。

1、Chapter2-AssetClassesandFinancialInstrumentsCHAPTER2:ASSETCLASSESANDFINANCIALINSTRUMENTSPROBLEMSETS1.Preferredstockislikelong-termdebtinthatittypicallypromisesafixedpaymenteachyear.Inthisway,itisaperpetuity.Preferredstockisalsolikelong-termdebtinthatitdoesnotgivetheholdervot

2、ingrightsinthefirm.Preferredstockislikeequityinthatthefirmisundernocontractualobligationtomakethepreferredstockdividendpayments.Failuretomakepaymentsdoesnotsetoffcorporatebankruptcy.Withrespecttothepriorityofclaimstotheassetsofthefirmintheeventofcorporatebankruptcy,preferred

3、stockhasahigherprioritythancommonequitybutalowerprioritythanbonds.2.Moneymarketsecuritiesarecalled“cashequivalents”becauseoftheirgreatliquidity.Thepricesofmoneymarketsecuritiesareverystable,andtheycanbeconvertedtocash(i.e.,sold)onveryshortnoticeandwithverylowtransactioncosts

4、.3.(a)Arepurchaseagreementisanagreementwherebythesellerofasecurityagreesto“repurchase”itfromthebuyeronanagreedupondateatanagreeduponprice.Reposaretypicallyusedbysecuritiesdealersasameansforobtainingfundstopurchasesecurities.4.Thespreadwillwiden.Deteriorationoftheeconomyincre

5、asescreditrisk,thatis,thelikelihoodofdefault.Investorswilldemandagreaterpremiumondebtsecuritiessubjecttodefaultrisk.5.Corp.BondsPreferredStockCommonStockVotingRights(Typically)YesContractualObligationYesPerpetualPaymentsYesYesAccumulatedDividendsYesFixedPayments(Typically)Ye

6、sYesPaymentPreferenceFirstSecondThird6.MunicipalBondinterestistax-exempt.Whenfacinghighermarginaltaxrates,ahigh-incomeinvestorwouldbemoreinclinedtopicktax-exemptsecurities.2-240Chapter2-AssetClassesandFinancialInstruments7.a.Youwouldhavetopaytheaskedpriceof:86:14=86.43750%of

7、par=$864.375b.Thecouponrateis3.5%implyingcouponpaymentsof$35.00annuallyor,moreprecisely,$17.50semiannually.c.Currentyield=Annualcouponincome/price=$35.00/$864.375=0.0405=4.05%8.P=$10,000/1.02=$9,803.929.Thetotalbefore-taxincomeis$4.Afterthe70%exclusionforpreferredstockdivide

8、nds,thetaxableincomeis:0.30´$4=$1.20Therefore,taxesare:0.30´$1.20=$0.36Afte