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1 . If a G . O Muni Bond with a coupon rate of 5 . 2 % and YTM of 4 . 6 %
If a GO Muni Bond with a coupon rate of and YTM of has a maturity date of
what would its price be assuming semiannual coupons points
a Why is the price a premium or discount to par? Briefly explain. points
b What is unique, in terms of how this bond is securedcollateralized and taxability of
coupons, about this particular bond...relative to a Revenue Bond points
Understanding how a yield curve is commonly used to forecast the expected change in direction of
interest rates, briefly explain how you might interpret the risk premiums discussed in class that
are inherent in a steep curve? points
If a Ford Motor year corporate debenture was trading a price of $ what would its YTM be if
it has a coupon rate semiannual payment points
Assuming this bond has a Ba credit rating S&P how might Ford improve its balance sheet capital
structure to potentially reduce its cost of capital? Please explain. points
Calculate todays stock price for CLF if last periods dividend was $ and its dividend growth
forever is expected to be
and a required rate of return of Points
Using the above assumptions Q how would you partition CLFs required rate of return...in terms
of its dividend yield and capital gains growth rate? Please show the computation. Points
If CLFs dividend was expected to grow at for the next years, and then return to a constant
growth rate of thereafter post year what would you model its stock price to be again
assuming a required rate of return of and D of $ Points
Period Performance
Q Questions:
What is the arithmetic average return over the past years? Points
What is the standard deviation of this sample of returns? Points
What distribution of returns would you expect of the time? Points
What is the expected return & standard deviation of a portfolio allocated in Asset A and in
Asset B Points
Econ Prob A Performance B Performance
Great
Normal
Poor
Inputs for WACC Re computed using CAPM only
LT Debt: bonds outstanding of a year maturity; PV; Coupon Rate
Semiannual
Common Stock: shares outstanding; $ price today
Preferred Stock: shares, dividend yield $ part $ share price
Other CAPM Information:
ERm
Rf
Beta
Tax Rate
Q Question: What is the WACC please show inputs on Excel Points
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