Question 1-4

Test 2 (52 marks available) Answer all questions. Submit all solutions in a PDF labelled FirstnameLastnameStudentlD.pdf. 1. (10 marks) For the following, define the bond features and identify, all else equal, the impact of the features on the bond's coupon: subordinated bond, sinking fund, call provision, convertible option. Provide a brief explanation. 2. (6 marks) How do shareholders earn returns (explain)? Are these returns risky? If so, how? 3. (6 marks) Compare and contrast discounted payback and profitability index. Based on your analysis, which would you use to assess a project? 4.(12 marks) Bond TTT has 10 years to maturity and has a coupon rate of 12% Bond ZZZ is comparable in risk to BOND TTT, is trading at par has 15 years to maturity has a coupon rate of 10%. If interest rates increase by 1.5%, what is the OD wo wa A 6 7 8 9 0 VA - 3 VA T R U Y F I L V B N M