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CFA Level I Chartered Financial Analyst Questions 2161–2165 (page: 434)

Brad Kit, CFA, is analyzing the broadcasting industry. Kit has narrowed his analysis to Willow Corp. and Vision Inc.
Willow Corp. is a media company with a diversified group of leading TV, newspaper, and cable news operations. Revenues and earnings have grown slightly over the past ten years. The company's long-term debt to capital ratio is 40%. During the last recession, the company's earnings remained flat with the prior year. Still, Kit believes that Willow Corp. will have positive earnings surprises over the next several quarters, due to several new programs that have been hugely successful.
Vision Inc.'s operations are located in emerging markets with a high degree of political and regulatory risk. However, the TV, radio, and internet operations have the potential for extraordinary returns. Vision's stock is trading at 30 times next year's earnings and five times book value. A client asks Kit whether Willow Corp. is a growth company or growth stock and whether Vision Inc. is a speculative company or speculative stock. Kit's most appropriate response would be that:

The following information is provided about Jacko Industries.
Using the method of average return on equity, Jacko's P/E ratio is closest to:

An analyst has stated that, holding all else constant, an increase in the maturity of a coupon bond will increase its interest rate risk, and that a decrease in the coupon rate of a coupon bond will decrease its interest rate risk.
The analyst is correct:

An analyst has been researching a possible investment in collateralized debt obligations (CDOs). Identify the statement which is most likely correct.

Chris South owns $25,000 face value of Bradco bonds, which have a 7% coupon, pay interest semiannually, and have six years remaining until maturity. The bonds are callable at par. The bonds were rated A when Chris bought them at par two years ago, and they are currently worth $26,225, with a rating of AA. Which of the following statements most accurately describes the change in the risk of the Bradco bonds?