Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Given the following information, what is the percentage dividend yield between today and period 1? Todays Dividend = $3.69 Expected Growth rate in dividends

1.

Given the following information, what is the percentage dividend yield between today and period 1?

Todays Dividend =

$3.69

Expected Growth rate in dividends =

5.24

Discount Rate (Required return) =

8.24

Calculate your answer to two decimal places (e.g., 2.51)

2.

Given the following information, what is the stock price in period 2?

Todays Dividend =

$4.45

Expected Growth rate in dividends =

4.51

Discount Rate (Required return) =

9.73

Calculate your answer to the nearest penny (e.g., 2.51)

3.

Given the following information, what is the stock price in period 1?

Todays Dividend =

$3.21

Expected Growth rate in dividends =

3.06

Discount Rate (Required return) =

6.85

Calculate your answer to the nearest penny (e.g., 2.51)

4.

What is the price of a bond with the following features?

  • Face Value = $1,000
  • Coupon Rate = 2% (stated as an ANNUAL rate)
  • Semiannual coupon payments
  • Maturity = 9 years
  • YTM = 6.71% (Stated as an APR

5.

Bond A has the following features:

Face value = $1,000,

Coupon Rate = 3%,

Maturity = 9 years, Yearly coupons

The market interest rate is 6.56%

What is the current yield for bond A from today to year 1?

Calculate your answer to 2 decimal places (e.g., 5.23)

6.

Bond A has the following features:

Face value = $1,000,

Coupon Rate = 4%,

Maturity = 9 years, Yearly coupons

The market interest rate is 7.62%

If interest rates remain at 7.62%, what is the percentage capital gain or loss on bond A if you sell the bond in year 1?

State your answer to 2 decimal places (e.g., 3.56, 0.29)

If there is a capital loss make sure to include a negative sign in your answer (e.g., -0.23)

7.

Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 4% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate = 3.33% Immediately after you buy the bond the interest rate changes to 5.03% What is the "reinvestment" effect in year 3 ?

8.

Given the following information, what is the dividend yield between period 1 and period 2?

Todays Dividend =

$2.48

Expected Growth rate in dividends =

4.31

Discount Rate (Required return) =

9.05

Calculate your answer to the nearest penny (e.g., 2.51)

9.

You own a bond with the following features:

Face value of $1000,

Coupon rate of 3% (annual)

15 years to maturity.

The bond is callable after 3 years with the call price of $1,052.

If the market interest rate is 4.89% in 3 years when the bond can be called, if the firm calls the bond, how much will it save or lose by calling the bond?

State your answer to the nearest penny (e.g., 84.25)

If there would be a loss, state your answer as a negative (e.g., -37.51)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essential Mathematics For Economic Analysis

Authors: Knut Sydsaeter, Peter Hammond

3rd Edition

0273713248, 9780273713241

More Books

Students also viewed these Finance questions