Corporate Finance megadraft PDF

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DRAFT FILE, UPLOAD ANSWERS AT THE LINK https://polimi.eu.qualtrics.com/jfe/form/SV_aawc6OAjaTdh71P A company needs funds. The alternatives are capital increase or bond issue. Considering the view of an investor, x • The risk on shares is higher than the one on bonds • The risk on shares is the same as the one on bonds • The risk on shares is lower than the one on bonds True or false? "Dilution" (in the sense we discussed it) applies to shareholders and bondholders • True x • False True or false? A company can be listed without an IPO x • True • False In case of bonds trading above par: • The return is positive • The return is null • The return is negative x • We cannot answer without having additional data (in case) which additional data do you need? Yield, Maturity In case of bonds trading above par: x • the return is higher than the coupon rate • the return is equal to the coupon rate • the return is lower than the coupon rate Different classes of stocks are usually issued to: • Pay less in dividends between the classes of stock x • Maintain ownership control by holding the class of stock with greater voting rights • Extract prerequisites without the other class of stockholders knowing A. Value of shares can change every day. B. Value of bonds can change every day. • Only A is true. • Only B is true. x • Both A and B are true. • None is true. Considering a convertible bond, describe the main differences with a "normal" bond (open question) Considering a convertible bond, describe the 4 main pros for the issuer of the bond (open question) Consider a reverse convertible bond, which kind of "option" is involved? • Call x • Put • Future / Forward • Swap • Other (explain)

Consider again a reverse convertible bond. Which is the position of investors (bondholders)? x? • Long • Short • Neutral A friend of mine is moving in a new flat. The contract defines that each month he is going to pay a rent of €700 to Flat&House Corporation. At the end of Dec 2024, the "right to buy" will apply i.e. in case he wants to buy that specific flat, all the rents will be considered and completely discounted from the price. The price was agreed directly in the contract here mentioned. Which instrument is here involved? • Share • Bond x • Derivative (in case) which kind of derivative? call option • Other (explain) Following the case of the flat - which is the benefit for Flat&House? (open question)...