罗斯公司理财第六版习题答案第5章.doc

Concept Questions ◆Define pure discount bonds, level-coupon bonds, and consols. A pure discount bond is one that makes no intervening interest payments. One receives a single lump sum payment at maturity. A level-coupon bond is a combination of an annuity and a lump sum at maturity. A consol is a bond that makes interest payments forever. ◆Contrast the state interest rate and the effective annual interest rate for bonds paying semi-annual interest. Effective annual interest rate on a bond takes into account two periods of compounding per year received on the coupon payments. The state rate does not take this into account. ◆What is the relationship between interest rates and bond prices? There is an inverse relationship. When one goes up, the other goes down. ◆How does one calculate the yield to maturity on a bond? One finds the discount rate that equates the promised future cash flows with the price of the bond. ◆What are the three factors determining a firms P/E ratio? Todays expectations of future growth opportunities. The discount rate. The accounting method. ◆What is the closing price of General Data? The closing price of General Data is 6 3/16. ◆What is the PE of General House? The PE of General House is 29. ◆What is the annual dividend of General Host? The annual dividend of General Host is zero. Concept Questions - Appendix To Chapter 5 ◆What is the difference between a spot interest rate and the yield to maturity? The yield to maturity is the geometric average of the spot rates during the life of the bond. ◆Define the forward rate. Given a one-year bond and a two-year bond, one knows the spot rates for both. The forward rate is the rate of return implicit on a one-year bond purchased in the second year that would equate the terminal wealth of purchasing the one-year bond today and another in one year with that of the two-year bond. ◆What is the relationship between the one-year spot rate, the two-year spot rate and the forward rate over the second yea