1. What would be the carried interest (at 18%) on a private equity portfolio with an initial value of $550 million that was subsequently liquidated for $875 million?
a. $58.5 million.
b. $325 million.
c. $99 million.
d. $157.5 million.
2. Which of the following statements are true?
I. In the steps a company takes to prepare for an IPO, the "bake-off" precedes the "road-show".
II. Issue costs for debt are typically larger than issue costs for equity.
III. Shelf registrations and private placements are examples of seasoned security issues.
IV. Bearer bonds make it easier for investors to avoid paying taxes on interest income.
a. I and II only
b. II and III only
c. II, III, and IV only
d. I, III, and IV only
e. I, II, III, and IV
3. Which of the following actions would help a firm's growth problem if its sustainable rate of growth exceeds its actual sales growth?
I. Repurchase Shares.
II. Buy a company with rapid growth.
III. Decrease dividends.
IV. Merge with a mature company, cash cow, looking for profitable investments for its excess cash flow.
a. I and II only
b. I and III only
c. I, II, and IV only
d. I, III, and IV only
e. I, II, III, and IV
4. When a bond sells at a discount, then
a. Yield to Maturity > Coupon Rate (i.e.,Coupon yield) > Current Yield.
b. Coupon Rate (i.e., Coupon yield) > Current Yield > Yield to Maturity.
c. Yield to Maturity > Current Yield > Coupon Rate (i.e., Coupon yield).
d. Coupon Rate (i.e., Coupon yield) > Yield to Maturity > Current Yield.