Capital Raising and Securities Evaluation

<p>Bond prices fall</p> Signup and view all the answers

<p>They are more affected by changes in interest rates</p> Signup and view all the answers

<p>The bond price rises</p> Signup and view all the answers

<p>£93.86</p> Signup and view all the answers

<p>They are more affected and their prices fluctuate more</p> Signup and view all the answers

<p>The constant rate of interest that discounts the bond’s future payments to its current price</p> Signup and view all the answers

<p>Trial and error</p> Signup and view all the answers

<p>0.93364</p> Signup and view all the answers

<p>7.108%</p> Signup and view all the answers

<p>Y &gt; coupon rate</p> Signup and view all the answers

<p>x = -b ± √(b2 - 4ac) / 2a</p> Signup and view all the answers

<p>£100</p> Signup and view all the answers

<p>To raise capital for the company's growth</p> Signup and view all the answers

<p>£100</p> Signup and view all the answers

<p>To facilitate the IPO process</p> Signup and view all the answers

<p>The percentage of the face value that the bond pays in interest each year</p> Signup and view all the answers

<p>To raise capital for the company's growth</p> Signup and view all the answers

<p>The date when the issuer repays the face value</p> Signup and view all the answers

<p>The amount of interest paid each year</p> Signup and view all the answers

<p>To provide financing for startups</p> Signup and view all the answers

<p>96.3</p> Signup and view all the answers

<p>11.3374%</p> Signup and view all the answers

<p>11.659%</p> Signup and view all the answers

<p>Annual coupon as a percentage of current price</p> Signup and view all the answers

<p>Medium</p> Signup and view all the answers

<p>P = 10 x (1 - 1/(1 + Y)^5) + 10 x (1 + Y)^(-5)</p> Signup and view all the answers

<p>Nominal yield is the annualized version of effective yield</p> Signup and view all the answers

<p>Percentage</p> Signup and view all the answers

<p>11.659%</p> Signup and view all the answers

<p>Market value</p> Signup and view all the answers

<p>P = ∑ [C / (1 + r)^t] + F / (1 + r)^n</p> Signup and view all the answers

<p>Dividend discount model</p> Signup and view all the answers

<p>P0 = Σ [dt / (1 + r)^t]</p> Signup and view all the answers

<p>Gordon Growth Model</p> Signup and view all the answers

<p>PV = d / r</p> Signup and view all the answers

<p>24p</p> Signup and view all the answers

<p>Effective yield</p> Signup and view all the answers

<p>The present value of a perpetuity of the dividend per share</p> Signup and view all the answers

<p>The effective yield is greater than the nominal yield</p> Signup and view all the answers

<p>The present value of the bond's future cash flows</p> Signup and view all the answers

<p>d / r</p> Signup and view all the answers

<p>They have higher interest rate risk</p> Signup and view all the answers

<p>The bond price decreases</p> Signup and view all the answers

<p>To estimate the intrinsic value of the share</p> Signup and view all the answers

<p>To fund growth, pay off debts, or finance mergers and acquisitions</p> Signup and view all the answers

<p>Initial Public Offering (IPO)</p> Signup and view all the answers

<p>Coupon rate</p> Signup and view all the answers

<p>Listing on a stock market</p> Signup and view all the answers

<p>Maturity date</p> Signup and view all the answers

<p>Corporate bond</p> Signup and view all the answers

<p>IPO process</p> Signup and view all the answers

<p>Face value</p> Signup and view all the answers

<p>The bond value will increase</p> Signup and view all the answers

<p>An increase in interest rates decreases bond price</p> Signup and view all the answers

<p>The interest rate risk increases</p> Signup and view all the answers

<p>The bond price will be equal to par value</p> Signup and view all the answers

<p>The coupon rate is less than the market interest rate</p> Signup and view all the answers

<p>The bond price will decrease</p> Signup and view all the answers

<p>The bond price will increase</p> Signup and view all the answers

<p>The bond price will increase</p> Signup and view all the answers

<p>Changes in market interest rates</p> Signup and view all the answers

<p>The return on the bond if you buy it and hold it until maturity</p> Signup and view all the answers

<p>To find the bond's yield to redemption</p> Signup and view all the answers

<p>Because the equation becomes a quadratic equation</p> Signup and view all the answers

<p>The yield is greater than the coupon rate</p> Signup and view all the answers

<p>X = (-b + sqrt(b^2 - 4ac)) / 2a</p> Signup and view all the answers

<p>The bond price decreases more</p> Signup and view all the answers

<p>To determine the bond's return on investment</p> Signup and view all the answers

<p>𝑃𝑜 = 𝑑1 / (𝑟 - 𝑔)</p> Signup and view all the answers

<p>₤267.6</p> Signup and view all the answers

<p>Dividends grow at a constant rate</p> Signup and view all the answers

<p>𝑃𝑜 = 𝑑0 / (𝑟 - 𝑔) + 𝑑0 * (1 + 𝑠) / (𝑟 - 𝑔)</p> Signup and view all the answers

<p>𝑔 &lt; 𝑟</p> Signup and view all the answers

<p>₤234.4</p> Signup and view all the answers

<p>Constant dividend growth is a special case of supernormal dividend growth</p> Signup and view all the answers

<p>𝑃𝑜 = 𝑑0 * (1 + 𝑔) / (𝑟 + 𝑔)</p> Signup and view all the answers