Unit 7 (Videos)

Question 1

Alive bonds are …

Answer 1

bonds that are still part of the financial structure of the company.

Question 2

We pay back to the amortized bonds a _______, and the ___________ may or may not have a premium.

Answer 2

refund value

refund value

Question 3

When we are amortizing the premium, the refund value becomes _________ than the nominal value of the bond.

Answer 3

bigger

Question 4

When we are talking about collection, if we issue bonds with premiums, the emission value is __________ the nominal value.

Answer 4

less than

Question 5

Premiums are ______ for the investors.

Answer 5

profits

Question 6

When issuing refunds, we pay back when we have _____ bonds.

Answer 6

amortized

Question 7

Refund is the same as amortization.

Answer 7

True

Question 8

Cost of capital, K, is …

Answer 8

the minimum % we need to get back on our investment

Question 9

Cash flow in capital equity can be the cash flow in moment 0 of our our investment - the loans and debentures + the cash flow in our cost of equity increase.

Answer 9

True

Question 10

If we have a percentage for a cost of increase, we need to divide the amount we are going to pay by (1+ the opening/closing/other fee)

Answer 10

FALSE

we divide the amount we are going to pay by (1-whatever fee)

Question 11

The cost of equity (capital) is the minimum return we need on our investment.

Answer 11

True

Question 12

We obtain the global cash flow by ….

Answer 12

adding each of the individual cash flows

Question 13

Grants are considered a cash ______ flow

Answer 13

in flow

Question 14

When we need to finance an investment, and we already have other sources of financing, we ask for a loan amount equal to _____________.

Answer 14

the pending amount we need to complete our financing + the opening costs of the loan

Question 15

Whenever we have commissions that are a percentage of our payment or loan amount, we calculate the total amount, including the commissions, by …

Answer 15

dividing our payment or necessary loan amount by (1-i%)

Question 16

When adding, the global cash-flows of a financial project, the total amount must be the same as …

Answer 16

our investment

Question 17

IRR is the rate that makes the negative and positive cash-flows equal to 0.

Answer 17

True

Question 18

The cost of capital can be found by finding the internal rate of return of the global cash-flows.

Answer 18

True

Question 19

To calculate the leasing installment where the purchase option is the same as the installments, we use the formula …

Answer 19

Leasing amount/(1+PV), with the payment being -1 for the present value formula (for the a)ni

Question 20

The alive bonds of each year is equal to the alive bonds + amortized bonds.

Answer 20

True

Question 21

Amortized bonds are cash outflows.

Answer 21

True

Question 22

When talking about debentures, collections are equal to the amortized bonds*the emission value.

Answer 22

FALSE

collections = emission value * number of bonds

Question 23

When you make an issue with premium, the emission value becomes _______ than the face value.

Answer 23

smaller

Question 24

When there is a premium, we calculate the emission value by …

Answer 24

emission = FV*(1-i%)

where i is the rate of the premium

Question 25

$$*(1-i%) reduces $$.

Answer 25

True

Question 26

$$$/(1-i%) increases $$$

Answer 26

True

Question 27

Amortization = amortized bond * refund value

Answer 27

True

Question 28

If the problem doesn’t tell us anything about the refund value, wee assume it is the same as the face value.

Answer 28

True