1. Bonds issued by VIX Industries have a par value of $1,000. The bonds are currently selling for $885.50. They have 10 years remaining to maturity. The coupon rate is 8% and the coupon payment is paid semiannually. What is the bonds yield to maturity?

   	a.	9.82%
   	b.	10.57%
   	c.	7.26%
   	d.	11.39%

2 points

Question 2

1. WMT Enterprise has bonds with face value of $1,000 on the market making annual payments, with 10 years to maturity, and selling for $1,146.80. At this price, the bonds yield 6%. What must the coupon rate be on Merton Enterprise s bonds?

   	a.	80
   	b.	60
   	c.	8%
   	d.	6%

2 points

Question 3

1. A MU Industries bond has a 10% coupon rate and a $1,000 face value. Interest is paid semiannually, and the bond has 15 years to maturity. If investors require an 8% yield, what is the bond s value?

   	a.	$1,172.9
   	b.	$948.7
   	c.	$1,062.4
   	d.	$1,138.2

2 points

Question 4

1. ABC Co. has just paid a cash dividend of $2.1 per share. Investors require a 16% return from investments such as this. If the dividend is expected to grow at a steady 9% per year, what is the current value of the stock?

   	a.	$30.1
   	b.	$36.3
   	c.	$32.7
   	d.	$34.9

2 points

Question 5

1. Following Question 4, what will the stock be worth in five years?

   	a.	$56.73
   	b.	$50.31
   	c.	$52.25
   	d.	$59.68

2 points

Question 6

1. XYZ Corporation will pay a $4.5 per share dividend next year. The company pledges to increase its dividend by 4% per year, indefinitely. If you require a 10% return on your investment, how much will you pay for the company stock today?

   	a.	$41.67
   	b.	$43.75
   	c.	$75
   	d.	$71.43

2 points

Question 7

1. Suppose we observe a stock selling for $40 per share. The next dividend will be $1 per share, and you think the dividend will grow at 12% per year forever. What is the dividend yield?

   	a.	12%
   	b.	14.5%
   	c.	2.5%
   	d.	2.8%

1 points

Question 8

1. Following Question 7, what is the capital gains yield?

   	a.	2.5%
   	b.	2.8%
   	c.	12%
   	d.	14.5%

1 points

Question 9

1. Following Question 7, what is the total required return?

   	a.	14.5%
   	b.	2.5%
   	c.	2.8%
   	d.	14.8%

2 points

Question 10

1. TXN, Inc., has an issue of preferred stock outstanding that pays a $6.3 dividend every year, in perpetuity. If this issue currently sells for $78.86 per share, what is the required return?

   	a.	7.99%
   	b.	74.86%
   	c.	79.89%
   	d.	7.42%

2 points

Question 11

1. BGN, Inc. just paid a dividend of $4. The dividend is expected to grow at a 30% rate for the next 3 years and at a 10% rate thereafter. What is the value of the stock if the required rate of return is 20%?

   	a.	$70.06
   	b.	$87.60
   	c.	$75.31
   	d.	$84.92