Long term financing

Below is the characteristics of bonds except

• Par value

• Maturity period

• Coupon interest

• voting right

The shareholders that do not get benefits even if the company’s   earnings grow is known as ________________________.

• preferred shareholders

• common shareholders

• debt holders

   

• hybrid shareholders

Mr Smith owns a bond that will pay him RM75 each year in interest plus a RM1,000 principal payment at maturity. The amount of RM75 is called   ______________________.

 

• face value

• interest rate

• coupon payment

• yield to maturity

What is the value of RM1,000 par value bond with 8 percent coupon rate when the required rate of return is 15 percent and maturity period is 5 years?

• value of bond is more than its par value

• value of bond equal than its par value

• value of bond is less to its par value

• value of bond cannot be determined

The preferred share dividend is RM2.50 and the required rate of return  is 5 percent. The value of preferred share would be _______________.

 

• RM20

• RM52

• RM125

• RM50

Which one of the following is a type of equity security that has a fixed   dividend and a priority status over equity securities?

• bond

• preferred share

• common share

• warrant

Mudajaya Sdn Bhd plans to issue bonds that pay 5 percent coupon interest with maturity period of 10 years. The bond has an RM1,000 par value and the required rate of return is 7 percent compounded annually. Compute the value of the bond.

• RM859.53

• RM900

• RM985.94

• RM753.34

World Berhad paid the common share dividend of RM0.50 per share last year. The dividend is expected to grow at constant rate of 7 percent a year. The required rate of return on the share is 15 percent (k). Determine the value company’s share

• RM6.25

• RM6.69

• RM3.33

• RM5.36

TLC Corporation issued preferred shares with a stated dividend of 5 percent of par. The required rate of return is 12 percent, and the par value is RM100. Calculate the price of the preferred shares.

• RM120

• RM50

• RM41.67

• RM63.30

A company with limited funds wishes to pay preferred share dividends, bond’s interest and ordinary dividends during a financial year. In what order should the company plan to make the payments?

 

• common share dividend, preferred share dividend, bond interest

• bond interest, preferred share dividend, common share dividend

• preferred share dividend, common share dividend, bond interest.

• bond interest, common share dividend, preferred share dividend.