Question
1. A company's bonds have a par value of $1,000 at par, a coupon rate of 7.8%, and a maturity of 30 years. The bonds
1. A company's bonds have a par value of $1,000 at par, a coupon rate of 7.8%, and a maturity of 30 years. The bonds currently sell for $1,107.20 and pay coupon semi-annually. What is the bond's yield to maturity?
2. The last dividend from a company was $1.35. The dividend growth rate is expected to be constant at 3.5% forever. The required return of this firm is 11%. What is the current stock price based on the constant growth model?
3. The firm's beta is 1.25, the market risk premium is 8.50%, and the risk-free rate is 4.50%. What is the required return of the company using CAPM?
4. A company's stock has a beta of 1.13. The market return is expected to be 11.75% and the risk free rate 4.35%. What is the required rate of return in this company?
5. A preferred stock is expected to pay a dividend of $2.5 forever. If the required return on the preferred stock is 12%, what is its current market price?
6. A company's bonds currently sell for $1,150 and have a par value of $1,000. They have a coupon rate of 6.35% with quarterly payments and a maturity of 20 years. What is the YTM of these bonds?
7. A company stock has a beta of 0.75. The required return based on CAPM is 11.75% and the risk-free rate is 4.35%. What is the expected return in the market?
8. A company is expected to pay a dividend of $0.75 per share next year, and that dividend is expected to grow at a constant rate of 6.50% per year going forward. If the required return is 12%, what is the price of this company based on the constant growth model?
9. The stock price of a company is $23.45 in the market and the dividend of this company is expected to grow at a constant growth rate of 4% forever. The last dividend paid by this company was $1.20. What is the dividend yield of this company?
10. The stock price of a company is $23.45 in the market and the dividend of this company is expected to grow at a constant growth rate of 4% forever. The last dividend paid by this company was $1.20. What is the required performance in this company?
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1 To calculate the bonds yield to maturity we can use the formula and plug in the given values Bond Price Coupon Payment Yield to Maturity 1 1 1 Yield to ...Get Instant Access to Expert-Tailored Solutions
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