Midterm Exam Solutions

Immediately after we are born, we start picking up sounds; the sound of our mother’s voice, the music playing in the elevator on the way to the car, and the happy cheers from a small child seeing their new sibling for the first time. We are always listening–picking up on conversations not meant for our ears, eavesdropping on the gossip of the adult world, and finding the meaning in the portentous silence. From all these auditory stimuli, we piece together the world around us to better understand what is happening to us, around us, and the secret happenings that were not for us to know. Great writers are the ones who listen and say nothing–who take it all in and save their classified information for a day when all the right words flow and form one epic story of the wondrous world we live in.

(d) $1 billion 10 year debenture @ 7.5% with 18.18 warrants at $ 55 exercisable until 1988.

As the health care delivery system developed in the US, it emphasized specialization over primary care.

Southlake Corporation issued $900,000 of 8% bonds on March 1, 20X1. The bonds pay interest on March 1 and September 1 and mature in 10 years. Assume the independent cases that follow.

Paired comparisons may be from one individual – before and after samples - or from different individuals who have been matched for some characteristic, e.g. sex, age, height etc. In this question, we are looking at “healthcare workers”. The needle-stick observations of healthcare workers share a link that makes them similar to one another and allows the researcher to “compare” needle-stick injuries in various settings, e.g. “all healthcare facilities” including in community and tertiary-care hospitals.

INCLUDES SOLUTIONS INCLUDES MARKERS’ REPORTS This is a three (3) hour paper. You have ten (10) minutes reading time. There are seven (7) questions. There are eight (8) pages, including this one. You must answer all parts of all questions. The questions are not of equal value. All answers must be written in blue or black ink. Show all relevant working.

1. This is a closed book exam. You may only have pens, pencils , a calculator and one cheat sheet double sided on 8 ½ by 11 paper at your desk.

A firm has an expected dividend next year of $1.20 per share, a zero growth rate

| 8. Caitlin had $402 in her bank account. She withdrew $15 each week to pay for a swimming lesson. She now has $237.

Equator - imaginary line at 0° latitude that divides the earth into the northern and southern hemispheres

Assuming the market interest rate on the issue date is 7%, the bonds will issue at $200,000. Record the bond issue on January 1, 2012, and the first two semi-annual interest payments on June 30, 2012, and December 31, 2012.

AirJet Best Parts, Inc. would like to issue 15-year bonds to obtain remaining funds for the new Mexico plant. The company currently has 8.25% semiannual coupon bonds in the market that sell for $987.50 and mature in 15 years.

- The Bet-r-Bilt Company has a 5-year bond outstanding with a 4.30 percent coupon. Interest payments are paid semi-annually. The face amount of the bond is $1,000. This bond is currently selling for 93 percent of its face value. What is the company's pre-tax cost of debt?

The market value of debt was calculated using the existing yield of maturity on a 5 yar bond issued on a private placement basis on July 1, 2000. With the coupon of 5.75% and the discount price of 97, YTM for this bond is 6.62%. With a discount price being 97, the market value of debt is 17,654M.

Midterm Instructions: Answer each question below in essay form, based on the principles and cases that we have reviewed so far this semester (i.e., Recognizing the Opportunity, Marshalling Resources).