11) A lending institution would prefer that a firm have a times interest earned ratio. debt-equity ratio and a A) higher; higher B) higher; lower C) lower; higher D) lower; lower Answer: y s (21 oled aletM aubi b nod no bo o aildino alss 12) When dividend payout ratios are higher than whether or not they are sustainable A) 15% B) 25% C) 40% D) 75% Answer: investors should investigate P0001 ienco oildoqa hna loote doao ot ms aeva d bas goen abiM 13. C&P Trading Inc. will pay a dividend for the first time at the end of 2016. It projects the following dividend per share: 2016 $1.60 2017 $2.50 2018 $2.80 Beginning with 2016 dividends will grow at 5% per year. The required rate of return is 10%. What is intrinsic value of C&P Trading shares? botelomoo ylovite o ylovitiso loat 14. An investor estimates that next year's sales for Dursley's Hotels Inc. should amount to about $100 million. The company has 5.0 million shares outstanding, generates a net profit margin of about 10 % , and has a payout ratio of 50 %. All figures are expected to hold for next year. Given this information, compute the following. a. Estimated net earnings for next year b. Next year's dividends per share c. The expected price of the stock (assuming the P/E ratio is 24.5 times eamings) d. The expected holding period return (latest stock price: $40 per share) d ai ,IS2 ( O0, 12 ( wwnA biw oii gnibml A ( brs o upo-idab ve mit ot b 15) Returns on the stock of First Boston and Midas Metals for the vears 2010-2013 are shown below. First Midas Metals 26.00% -5.00% 3.00% 10.00% Boston -18.00% 32.00% 18,00% 1.00% Portfolio 2010 2011 efgid onn soitn to bobib e ( aldant a as ron 1o absd e2r (A SP(8 2012 2013 a. Avg. b. St. Dev. 8Er (d a. Compute the average annual retur Boston and 40% Midas . b. Compute the standard deviation for each stock and the portfolio. nl gib c. Are the stocks positively or negatively correlated and what is the effect on risk? each stock and a portfolio consisting of 60% First 03.12 10 02.52 03.52 8100 to Beg adT og te wo Ili bbl S gib 10w ainig