chapter 8

A7X Corp. just paid a dividend of $1.30 per share. The dividends are expected to grow at 30 percent for the next 8 years and then level off to a growth rate of 7 percent indefinitely.

If the required return is 13 percent, what is the price of the stock today?

Multiple Choice

• $1.77

• $93.53

• $71.14

• $89.87

• $91.70

chapter 7

12)

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of 1,000, 6 years to maturity, and a coupon rate of 8 percent paid annuallly. If the yield to maturity is 9 percent, what is the current price of the bond?

rev: 02_28_2019_QC_CS-161195

Multiple Choice

• 1,002.90

• 1,050.23

• 1,030.00

• $907.38

• 955.14

13)

Gabriele Enterprises has bonds on the market making annual payments, with 10 years to maturity, a par value of $1,000, and selling for $790. At this price, the bonds yield 11 percent. What must the coupon rate be on the bonds?

Multiple Choice

• 9.41%

• 7.43%

• 14.87%

• 11.00%

• 7.53%

16)

Workman Software has 8.0 percent coupon bonds on the market with 15 years to maturity. The bonds make semiannual payments and currently sell for 87.5 percent of par.

a.	What is the current yield on the bonds?
	multiple choice 1 9.60% 10.10% 9.14% 0.19%

b.	The YTM?
	multiple choice 2 9.59% 4.79% 8.50% 9.77%

c.	The effective annual yield?
	multiple choice 3 9.56% 10.31% 0.09% 9.82%

17)

Chamberlain Co. wants to issue new 19-year bonds for some much-needed expansion projects. The company currently has 8.2 percent coupon bonds on the market that sell for $1,171.83, make semiannual payments, and mature in 19 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? Assume a par value of $1,000.

Multiple Choice

• 6.90%

• 6.50%

• 3.30%

• 6.60%

• 6.30%