6. c. 7. If the nominal rate of interest is 4.2% and the real rate of interest is just 8%, what is the expected inflation rate according to the Fisher Effect? Hint: (I+R) = (1+r)(1+h) Inflation is about 1.77% b. Inflation is about 3.37% Inflation is about 1.37% d. Inflation is about 0.67% Buy High and Sell Higher Corp. has a 6% coupon rate on their bond with a par value of $1,000, paid annually. The YTM (yield to maturity) is 7% and the current yield on the bond is 6.55%, or .0655. Eind the current price of the bond based on information on this current yield. HINT: The current yield is the Annual Coupon Payment/Current Price $1,000.00 b. $916.03 $937.18 d. $1,044.27 il c. 8. A graph of the yield relative to the length of maturity is called the term structure of interest rates. Which of the following (by selecting a letter attached to it) is an illustration of a "normal" yield curve? b. d. None of these Chapter 7: Equity markets and stock valuation (8 questions) 9. The next dividend payment by Giannis, Inc. will be $2.45 per share. The dividends are anticipated to maintain a 5.5 percent growth rate (g=055), forever. If the stock currently sells for $48.50 per share, what is the required return? 0505 .0550 1055 1138 a. b. C d. 10. The D/P, is referred to as the: a capital gains yield. b discount rate. C. total return d dividend yield. E # # 3 | 11. 3. Who typically votes on who are to be directors of the corporation? preferred shareholders b. the senior bondholders the employees d. the shareholders