Question

5. The forward-year multiples are typically preferred to trailing (last twelve month)  multiples in comparable companies because Investors are more focused on earnings potential than historical earnings.

a. True

b. False

6.  Rally’s bonds are priced at 90% of par in the Wall St. Journal.  The par value of bond is $1000.  The coupon rate is 10%, and they have 5 years remaining until maturity.  What is their YTM, based on semi-annual compounding?

a. 12.76%

b. 9.76%

c. 6.38%

d. 6.58%

Answer 1

a. True. Investors are always looking toward the performance of the company when compared with industry which makes them to make a good decision

b. Option A 12.76%