QUESTION CFA Examination Level II Patrick Wall is considering the purchase of one of the two bonds described in the following table. Wall realizes his decision will depend primarily on effective duration, and he believes that interest rates will decline by 50 basis points at all maturities over the next six months. BOND DESCRIPTIONS Characteristic […]
QUESTION CFA Examination Level II On May 30, 1999, Janice Kerr is considering purchasing one of the following newly issued 10-year AAA corporate bonds shown in the following exhibit. Kerr notes that the yield curve is currently flat and assumes that the yield curve shifts in an instantaneous and parallel manner. BOND CHARACTERISTICS Description Coupon […]
QUESTION As the chief investment officer for a money management firm specializing in taxable individual investors, you are trying to establish a strategic asset allocation for two different clients. You have established that Ms. A has a risk-tolerance factor of 8 while Mr. Bs risk-tolerance factor is 27. The characteristics for four model portfolios follow: […]
QUESTION CFA Examination Level II Westfield Capital Management Companys equity investment strategy is to invest in companies with low price-to-book ratios, while taking into account differences in solvency and asset utilization. Westfield is considering investing in the shares of either Jerrys Department Stores (JDS) or Miller Stores (MLS). a. Calculate each of the following ratios […]
QUESTION A $1,000 face value corporate bond with a 6.75% coupon (paid semiannually) has 10 years leftto maturity. It has a credit rating of BB and a yield to maturity of 8.2%. The firm recentlybecame more financially stable and the rating agency is upgrading the bonds to BBB. Thenew appropriate discount rate will be 7.1%. […]
QUESTION Balance sheet relations. The balance sheet of Gold Fields Limited, a South African gold mining company, for the year ended June 30, 2007, showed current assets of R6,085.1, noncurrent assets of R49,329.8, noncurrent liabilities of R13,948.4, and current liabilities of R4,360.1. Gold Fields reports all amounts in millions of South African Rand (R). Compute […]
QUESTION P6-13 (Expected Cash Flows and Present Value) Dannys Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2012, Danny sold $300,000 of new specialty mowers for golf greens for which Dannys service department does not have the equipment to do the service. Danny has entered […]
QUESTION BE6-1 Chris Spear invested $15,000 today in a fund that earns 8% compounded annually. To what amount will the investment grow in 3 years? To what amount would the investment grow in 3 years if the fund earns 8% annual interest compounded semiannually? Future value = Present Value * ((1 rate of interest)^Time) Future […]
QUESTION Computations involving different cost-flow assumptions. Sun Health Foods purchases of vitamins during 2008, its first year of operations, were as follows: Quantity Cost per Unit Total Cost January 5 Purchase ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION Here are four industries and four forecasts for the macroeconomy. Match the industry to the scenario in which it is likely to be the best performer. Industry Economic Forecast a. Housing construction (i) Deep recession: falling inflation, interest rates, and GDP ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
