投资学精要-博迪-第八版-课后答案-Chapter2.doc
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Chapter02-AssetClassesandFinancialInstruments
CHAPTER02
ASSETCLASSESANDFINANCIALINSTRUMENTS
1.Commonstockisanownershipshareinapubliclyheldcorporation.Commonshareholdershavevotingrightsandmayreceivedividends.Preferredstockrepresentsnonvotingsharesinacorporation,usuallypayingafixedstreamofdividends.Whilecorporatebondsarelong-termdebtbycorporations,typicallypayingsemi-annualcouponsandreturningthefacevalueofthebondatmaturity.
2.WhiletheDJIAhas30largecorporationsintheindex,itdoesnotrepresenttheoverallmarketnearlyaswellasthe500stockscontainedinTheWilshireindex.TheDJIAissimplytoosmall.
3.Theyareshortterm,verysafe,andhighlyliquid.Also,theirunitvaluealmostneverchanges.
4.Treasurybills,certificatesofdeposit,commercialpaper,bankers’acceptances,Eurodollars,repos,reserves,federalfundsandbrokers’calls.
5.AmericanDepositoryReceipts,orADRs,arecertificatestradedinU.S.marketsthatrepresentownershipinsharesofaforeigncompany.Investorsmayalsopurchasesharesofforeigncompaniesonforeignexchanges.Lastly,investorsmayuseinternationalmutualfundstoownsharesindirectly.
6.Becausetheyproducecouponsthataretaxfree.
7.Thefedfundsrateissimplytherateofinterestonveryshort-termloansamongfinancialinstitutions.TheLondonInterbankOfferRate(LIBOR)istherateatwhichlargebanksinLondonarewillingtolendmoneyamongthemselves.
8.Generalobligationbondsarebackedbythelocalgovernments,whilerevenuebondshaveproceedsattachedtospecificprojects.Arevenuebondhaslessguarantees,therefore,itisriskierandwillhaveahigheryield.
9.Corporationsmayexclude70%ofdividendsreceivedfromdomesticcorporationsinthecomputationoftheirtaxableincome.
10.Limitedliabilitymeansthatthemostshareholderscanloseineventofthefailureofthecorporationistheiroriginalinvestment.
11.Moneymarketsecuritiesarereferredtoas“cashequivalents”becauseoftheirgreatliquidity.Thepricesofmoneymarketsecuritiesareverystable,andtheycanbeconvertedtocash(i.e.,sold)onveryshortnoticeandwithverylowtransactioncosts.
12.Taxableequivalentyield=.0675/(1-.35)=.1038
13.
a.Thetaxablebond.Withazerotaxbracket,theafter-taxyieldforthetaxablebondisthesameasthebefore-taxyield(5%),whichisgreaterthantheyieldonthemunicipalbond.
b.Thetaxablebond.Theafter-taxyieldforthetaxablebondis:
0.05x(1–0.10)=4.5%
c.Youareindifferent.Theafter-taxyieldforthetaxablebondis:
0.05x(1–0.20)=4.0%
Theafter-taxyieldisthesameasthatofthemunicipalbond.
d.Themunicipalbondoffersthehigherafter-taxyieldforinvestorsintaxbracketsabove20%.
14.Theafter-taxyieldonthecorporatebondsis:
[0.09x(1–0.30)]=0.0630=6.30%.Therefore,themunicipalsmustofferatleast6.30%yields.
15.Theequivalenttaxableyield(r)is:
r=rm/(1–t)
a.4.00%
b.4.44%
c.5.00%
d.5.71%
16.
a.Youwouldhavetopaytheaskedpriceof:
107:
27=107.8438%ofpar=$1,074.438
b.Thecouponrateis4.875%,implyingcouponpaymentsof$48.75annuallyor,moreprecisely,$24.375semiannually.
c.Currentyield=Annualcouponincome/price=
4.875/107.8438=0.0452=4.52%
17.
a.Theclosingpricetodayis$74.92,whichis$1.82belowyesterday’sprice.Therefore,yesterday’sclosingpricewas:
$74.92+$1.82=$76.74
b.Youcouldbuy:
$5,000/$74.92=66.74shares
c.Yourannualdividendincomewouldbe1.90%of$5,000,or$95.
d.Earningspersharecanbederivedfromtheprice-earnings(PE)ratio.
Price/Earnings=13andPrice=$74.92sothatEarnings=$74.92/13=$5.7631
18.
a.Att=0,thevalueoftheindexis:
(90+50+100)/3=80
Att=1,thevalueoftheindexis:
(95+45+110)/3=83.3333
Therateofreturnis:
(83.3333/80)–1=4.167%
b.Intheabsenceofasplit,stockCwouldsellfor110,andthevalueoftheindexwouldbe:
(95+45+110)/3=83.3333
Afterthesplit,stockCsellsat55.Therefore,weneedtosetthedivisor(d)suchthat:
83.3333=(95+45+55)/d…..d=2.340
c.Therateofreturniszero.Theindexremainsunchanged,asitshould,sincethereturnoneachstockseparatelyequalszero.
19.
a.Totalmarketvalueatt=0is:
(9,000+10,000+20,000)=39,000
Totalmarketvalueatt=1is:
(9,500+9,000+22,000)=40,500
Rateofreturn=(40,500/39,000)–1=3.85%
b.Thereturnoneachstockisasfollows:
Ra=(95/90)–1=0.0556
Rb=(45/50)–1=–0.10
Rc=(110/100)–1=0.10
Theequally-weightedaverageis:
[0.0556+(-0.10)+0.10]/3=0.0185=1.85%
20.Thefundwouldrequireconstantreadjustmentsinceeverychangeinthepriceofastockwouldbringthefun