FNCE 330 corporate finance

7. Given the following information for the common shares of Xanada, Ltdl, calculate the value of beta for the company. Assume that the share is in equilibrium. Current price per common share $75 Last dividend paid per share $4.50 Constant annual dividend growth rate 4% Risk-free rate of return 3% Return on market portfolio 7% a) Calculate the value of beta for the company. 8 8. ABC, Inc. issued at par value a 15-year 6% semi-annual coupon bond with a par value of $1,000. At the end of 2 years, the market interest rate increases to 7%. One year later, the market interest rate is 8%. If an investor purchases the bond at the end of year 2 and sold it 1 year later, how much is the gain or loss? (Hint: You will have to find bond prices.) 6 9. O'Brien Ltd.'s outstanding bonds have a $1000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%. They pay interest semiannually, and they sell at a price of $850. What is the bond's nominal (annual) coupon interest rate. (Hint: You will have to find the coupon payment first.)