Question
1) An investment opportunity will pay 50 with a 10% probability, 20 with a 40% probability, orwill result in a loss of 20 with a
1) An investment opportunity will pay 50 with a 10% probability, 20 with a 40% probability, orwill result in a loss of 20 with a 50% probability. What is the expected value of the investment?
2)50,000 is invested for 6 months at 12% per annum. At the end of 6 months, if interest is compounded semi-annually whatThe value of the investment, to the nearest whole pound?
3)Songify Ltd. have 8% coupon bonds traded on the market that have 5 years left to maturity.The face value is 1,000 and coupon payments are made annually. If investors require a rateof return of 11% What is the current bond price, to the nearest whole pound?
4)Alpha Corporation has just paid a dividend of $0.25 on its stock. They expect dividends to growat a rate of 6% in the first two years and 3% per year thereafter. Given a required rate of returnof 10%, what is the current value of Alpha Corp. common stock?
5)Trust Chainsaws plc manufactures garden equipment. The company has just paid a dividendof 0.20 per share and dividends are expected to grow at a constant rate of 8% per yearindefinitely. Investors require a return of 10% on the companys stock.What should Trust Chainsaws current share price be and what will the price be in three years?
6)Shares of BOB plc are currently trading at 220p each. Management announces a rights issuewhere existing shareholders will be given the right to purchase one share at 120p for eachthree shares currently held. What is the ex share price and value of one right?
7)Pally Time Clocks plc declares a dividend payment of 20p per share. Ignoring taxes and thetime value of money, and assuming that markets are efficient, you would expect stock price to:
a. Immediately increase by 20p on the payment date
b. Immediately increase by 20p on the ex-dividend date
c. Immediately decrease by 20p on the declaration date
d. Immediately decrease by 20p on the ex-dividend date
e. None of the above
Can i also have the answers with the formulas if possible please
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started