Finance

Problem 1 (15 Points)
You have the following bond maturing in 4 years:
Face Value = 1.000$;
Semiannual dividends = 30$;
Annual Interest rate= 4%
1. Compute the PV of the cash flows?

2. What will happen to the bond price if the interest rate increases to 6%?

Problem 2 (20 Points)
ONCF has issued a 4% bond maturing in 5 years.
The bond pays semi-annual coupon.
1. If the required rate of return is 2.5%, compute the PV of the bonds.
2. What will happen to the price of the bond:
A. Interest rate increases to 4%?
B. Interest rate decreases to 1.5%?
Explain in details all your answers.

Problem 3 (15 Points)
You are interested by the growth opportunities that offer a company listed in Casablanca stock market.
You are expecting this company to pay a Dividend of 15 MAD next year and its price is expected to be 250 MAD.
1. If the expected return is 10%, compute P0 (price of the bond today).
2. If the current price is less than the price computed in part 1, what you will do as an investor?

Problem 4 (50 Points)
The financial statement of CIH, a Moroccan bank, of the years 2015 and 2016 are given below.
You are required to compute and analyze the trend of the main ratios:
– Liquidity: 4 ratios
– Leverage (financial) ratios: 3 ratios
– Profitability ratios: 3 ratios
In total, you have to compute and interpret 10 ratios for both 2015 and 2016.
All the figures are in MAD Thousands

Leave a Reply

Your email address will not be published. Required fields are marked *