7. Briefly explain the differences between preferred and common stock. If you are the investor which one will you prefer and why?

8. What are the different kinds of risk in finance.

9. You currently have AED90,000 and plans to purchase a 6-year certificate of deposit (CD). How much will you have when the CD matures if it pays 7% interest, compounded annually?

10. Norwegian Adventures offers a 7% coupon bond with annual payments. The yield to maturity is 8% and the maturity date is 7 years from today. What is the market price of this bond if the face value is $1,000?

11. A 10-year government bond with a face value of $ 1,000 pays a coupon of 8% annually. The compounded interest rate is 9%.

a) Calculate the present value of the bond.

b) Generate a table showing how the bonds present value changes for annually compounded interest rates between 1% and 15%.

c) What can you deduce about the relationship between the bond price and the yield to maturity (YTM)?

12.

a). State whether True or false? Explain The value of share equals the discounted stream of future earnings per share.

b). Consider the following two stocks:

a. Stock A is expected to provide a dividend of $10 a share forever.

b. Stock B is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 4% a year forever. If the market capitalization rate for each stock is 10%, which stock is the most valuable? What if the capitalization rate is7%?