Problem 1. How is valuation of any financial asset related to future cash flows?
Problem 2. Why might investors demand a lower rate of return for an investment in ExxonMobil as compared to United Airlines?
Problem 3. What are the three factors that influence the required rate of return by investors?
Problem 4. Inflationary expectations increase, what is likely to happen to yield to maturity on bonds in the marketplace? What is also likely to happen to the price of the bonds?
Problem 5. Why is the remaining time to maturity an important factor in evaluating the impact of a change in yield to maturity on bond prices?
Problem 6. What are the three adjustments that have to be made in going from manual to semiannual bond analysis?
Problem 7. Why is a change in required yield for preferred stock likely to have a greater impact on price than a change in required yield for bonds?
Problem 8. What type of dividend pattern for common stock is similar to the dividend payment for preferred stock?
Problem 9. What two components make up the required rate of return on common stock?
Problem 10. What factors might influence a firm's price-earnings ratio?
Problem 11. How is the supernormal growth pattern likely to vary from the normal, constant growth pattern?
Problem 12. What approaches can be taken in valuing a form's stock when there is no cash dividend payment?