Name_______________________

1.                  What stage in the industry life cycle would you view the auto industry (Ford, GM) to be? Why?

2.                  If a stock has a retention ratio of 90% and a return on equity of 15%, what would the sustainable growth model predict to be its growth rate for EPS?

3.                  Why do fast growing companies tend to pay no dividends while mature companies have higher dividend yields?

4.                  What is the yield to maturity of a 6.5% coupon-rate, $1,000 par value bond that sells for $945 if it has 26 years to maturity?

5.                  Given a five-year bond with a par value of $1,000 and a coupon payment of 5%, what would be the price of bond if its yield to maturity were 5.75%?  The coupon payment is $25 semiannually.

6.                  List the three theories of the term structure of interest rates.

7.                  Define what is meant by duration of a bond.

8.                  What is the duration of a 20-year Treasury strip (zero-coupon bond) with a price of $455?

9.                  Compute the duration of a two-year note with an annual coupon payment of $80, a par value of $1,000, when the note’s yield to maturity is 6.3%.

10.              Define convexity of a bond.

11.              Explain the concept of a top-down valuation process.

12.              What has the Federal Reserve done over the past year with monetary policy that has had an impact on stock prices?

13.              If the economy appears to be slowing down or entering a recession, in which industries would you want to invest?  Why?

14.              How could a top-down money investor use rotational investing?

15.              Explain how government regulation can negatively impact an industry.

16.              What is the yield to call of an 8% coupon-rate, $1000 par value bond priced at $1,150 if it has 15 years to maturity but in 4 years it can be called $1,030?  Coupon payments are paid semiannually.

17.              What is the current yield on the bond in problem 16?

18.              How can the market price of a bond be described in the terms of present value?

19.       If a $2,000 investment grew to $4,500 over 5 years, what would the annual rate if return be?

20.       What was the name of the last speaker we had in class?  What main concept did you learn from his/her lecture?