Question: Where will we get the long-term financing to pay for the investments? What should be the goal of a corporation? Does this mean we should

  1. Where will we get the long-term financing to pay for the investments?

  2. What should be the goal of a corporation? Does this mean we should do anything and everything to maximize owner wealth?

  3. What are agency problems, and why do they exist within a corporation?

  1. What is the time value of money? Please explain it.

  2. What are the differences between simple interest, compound interest and continuous compound interest?

  1. Explain the relationship between bond price and years remaining the maturity

  2. Suppose a bond with a 14% coupon rate and semiannual coupons with 12% YTM and has a face value of $1000, 10 years to maturity. What is the price of the bond? Is this a premium or discount bond?

A firms stock is selling for $134. They just paid a $4 dividend and dividends are expected to grow at 8% per year.

1. What is the required return?

2. What is the dividend yield?

3. What is the capital gains yield?

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