ABC company bonds have a par value of $1,000, a life of 10 years, and pay 6% coupon interest semiannually. If the yield to maturity of these bonds is 7.0%, what are the bonds worth?

Group of answer choices

$1,000

$928

$576

$1,003

TRW Corporation has a series of 13-year, 4% coupon (paid semi-annually), $1,000 par value bonds outstanding. If these bonds are selling for $1,040, what is their yield to maturity?

Group of answer choices

3.6%

4.0%

6.3%

2.2%

Flag this Question

Question 37.5 pts

An investor buys a bond that has a 5-year life, an annual coupon rate of 5.5%, and is currently trading at a Yield to Maturity of 5.5%. The coupons are paid semi-annually, and the bond has a par value of $1,000. After holding the bond for 1-year, the bonds Yield to Maturity has decreased from 5.5% to 4.0%. Assume that the investor has received a full year of coupon payments. What is this investors Rate of Return from this investment?

Group of answer choices

4.0%

5.5%

9.4%

11.0%

Flag this Question

Question 47.5 pts

A bond currently is selling at a price of $956. It has an annual coupon of 6.2%, and a maturity of seven years. The par value is $1,000, and it pays its coupons semiannually. What is this bonds current yield?

Group of answer choices

6.5%

10.3%

9.7%

6.7%

Flag this Question

Question 57.5 pts

TPY company bonds have a par value of $1,000, a life of 10 years, and pay 0% coupon interest semiannually (they are zero-coupon bonds). If the yield to maturity of these bonds is 4.0%, what are the bonds worth?

Group of answer choices

$1,000

$0

$673

$454

Flag this Question

Question 67.5 pts

Currently, the US stock market (as measured by the S&P 500) has a historical rate of return of 8.5% per year. If inflation runs 3% this year, what will be your real (inflation-adjusted) return?

Group of answer choices

5.34%

5.5%

11.5%

1.08%

Flag this Question

Question 77.5 pts

The interest rate in the economy has just fallen from 3% to 1%. Last year, you purchased a bond at par that pays a 5% coupon rate, has a $1,000 par value, and 5 years to maturity. All of the following will change with regard to your bond except:

Group of answer choices

The yield to maturity

The rate of return on the bond

The bonds price

the bonds coupon rate

Flag this Question

Question 87.5 pts

You are evaluating an investment that pays you the following dividends: $3,000 at the end of year 1 $2,000 at the end of year 2 $2,500 at the end of year 3 The investment ends at the end of the third year. Your interest rate to finance this investment is 10% What is the maximum amount you would be willing to pay today to make this investment?

Group of answer choices

$6,258

$7,500

$2,500

$0

Flag this Question

Question 97.5 pts

Westinghouse Corporation has earnings of $2.98 per share and has just paid a dividend per share of $.67. What is its dividend payout ratio?

Group of answer choices

100%

22.5%

77.5%

0%

Flag this Question

Question 107.5 pts

T Manufacturing has just issued a perpetual preferred stock. If the preferred stock has a dividend of $5.50 per share, and is currently selling at a discount rate of 7.5%, what are these shares currently trading at?

Group of answer choices

$5.50

$73.33

$55.50

$41.25

Flag this Question

Question 117.5 pts

H Corporation is expected to pay a dividend of $3.50 per share next year. After that time, the dividends are expected to grow at the rate of 6% per year in perpetuity. If investors in this stock require an 8% rate of return, what price should the stock sell at?

Group of answer choices

$35.00

$175.00

$3.75

$66.50

Flag this Question

Question 127.5 pts

Which of the following statements is not true?

Group of answer choices

a company can use its profits to buy back its shares in the market

a company that does not pay dividends will always have a value of zero.

A stocks total return is the sum of its dividend yield and capital gain yield

the book value of a company is always less t

Flag this Question

Question 137.5 pts

What is the Net Present Value (NPV) of a project that has a capital investment of $420,000 and generates cash flows in year 1 = $230,000, Year 2 = $189,000 and year 3 = $212,000. The companies cost of capital is 10%.

Group of answer choices

$104, 568

- $20,510

$90,231

$457,000

Flag this Question

Question 147.5 pts

What is the Internal rate of Return (IRR) of a project that has a capital investment of $420,000 and generates cash flows in year 1 = $230,000, Year 2 = $189,000 and year 3 = $212,000 ?

Group of answer choices

4.5%

12.8%

10.0%

23.9%

Flag this Question

Question 157.5 pts

What is the Discounted Payback of a project that has a capital investment of $560,000 and generates cash flows in year 1 = $230,000, Year 2 = $189,000 and year 3 = $212,000. The companies cost of capital is 10%.

Group of answer choices

3.0 years

the project never pays back

2.1 years

1.6 years

Flag this Question

Question 167.5 pts

What is the Profitability Index (PI) of a project that has a capital investment of $420,000 and generates cash flows in year 1 = 230,000, Year 2 = 189,000 and year 3 = 212,000. The companies cost of capital is 10%.

Group of answer choices

.25

.99

1.16

23.78

Flag this Question

Question 177.5 pts

A firm has a choice between investing in two projects. Project A has an NPV of $2,150,000 and an IRR of 12%. Project B has an NPV of 158,000 and an IRR of 15%. The companys cost of capital is 10.0%. The company should:

Group of answer choices

not do either project

borrow enough money to raise its cost of capital above 12%

If it has only enough capital to do one project, it should do project B

If it has only enough capital to one project, it should do project A

Flag this Question

Question 187.5 pts

What is the biggest drawback to using the discounted payback rule to evaluate an investment decision?

Group of answer choices

it underestimated the cost of capital

It only considers cash flows after the project is paid back.

it doesnt consider cash flows after the project is paid back.

It doesnt consider the present value of the projects future cash flows.

Flag this Question

Question 197.5 pts

A projects Internal Rate of Return (IRR) is:

Group of answer choices

the cost of the capital to the firm.

the rate used to calculate the amount of depreciation.

the discount rate that makes the NPV equal to zero.

The time in years that it takes for a project to pay back its initial investment.

A project will require adding $50 to Cash, $200 to Accounts Receivable, $150 to Inventory, and $200 to Accounts Payable. It will also require a capital investment of $500. What is the change in Net Working capital?

Group of answer choices

$700

$200

$1,200

$400