HELP PLEASE WITH QUESTIONS 19 to 28

Questions 19-21 are based on the following information. Bond investment. Suppose, you are a bond portfolio manager. The composition of your portfolio is as follows. 1-year Treasury note (180 days till maturity): 10% 5-year Treasury note (2 years till maturity): 20% 10-year Treasury note (9 years till maturity): 25% 30-year Treasury bond (8 years till maturity): 15% 30-year Corporate bond (10 years till maturity): 30% You are pessimistic about the economy and hence predict the Fed will cut the interest rate further by 50 basis points. 19. Usually, which of the following bonds in your portfolio has the highest yield? a. 1-year T-note b. 5-year T-note c. 30-year T-bond d. 30-year corporate bond 20. If you decide not to adjust the composition of your bond portfolio according to the prediction, then a. the total value of the portfolio will increase. b. the total value of the portfolio will decrease. c. the total value of the portfolio will unchanged. d. none of the above. 21. Which of the following in your bond portfolio will be affected the most by the market interest rate drop? a. 1-year T-note b. 5-year T-note c. 10-year T-note d. 30-year T-bond Questions 19-21 end. Questions 22-26 are based on the following information. CAPM and stock valuation. Your aunt, Beth, plans to invest in the common stock of Smart-investment Corporation. Knowing that you are studying finance, she asks for your suggestion. You calculation shows that yield on Treasury securities is 6%. You know that the S&P 500 Index's expected annual return is 14%. Aunt Beth tells you that this company just paid an annual dividend of $2. After collecting as much information about this firm as possible, you expect the firm's dividend will grow at an annual rate of 7% forever. The stock is sold for $32 per share for the time being. 22. The firm's dividend of next year is expected to be a. $1.75 b. $2.00 c. $2.14 d. $2.44 23. The market risk free rate is a. 6% b. 7% c. 14% 24. The expected return of the market portfolio is a. 6% b. 7% c. 14% 25. The valuation of the stock is a. $32.00 b. $28.57 c. $29.75 d. $30.57 26. Your suggestion to aunt Beth is a. buy this stock because it is underpriced b. do not buy this stock because it is overpriced Questions 22-26 end. 27. If shareholders are granted a preemptive right they will: a. be given the choice of receiving dividends either in cash or in additional shares of stock. b. be paid dividends prior to the preferred shareholders during the preemptive period. c. be entitled to two votes per share of stock. d. have priority in the purchase of any newly issued shares. 28. What market yield is implied by a share of common stock currently selling for $44 whose dividend just paid this year was $2.00 and is expected to grow at an annual rate of 10% forever? a. 6% b. 9% c. 14.5% d. 15% Questions 19-21 are based on the following information. Bond investment. Suppose, you are a bond portfolio manager. The composition of your portfolio is as follows. 1-year Treasury note (180 days till maturity): 10% 5-year Treasury note (2 years till maturity): 20% 10-year Treasury note (9 years till maturity): 25% 30-year Treasury bond (8 years till maturity): 15% 30-year Corporate bond (10 years till maturity): 30% You are pessimistic about the economy and hence predict the Fed will cut the interest rate further by 50 basis points. 19. Usually, which of the following bonds in your portfolio has the highest yield? a. 1-year T-note b. 5-year T-note c. 30-year T-bond d. 30-year corporate bond 20. If you decide not to adjust the composition of your bond portfolio according to the prediction, then a. the total value of the portfolio will increase. b. the total value of the portfolio will decrease. c. the total value of the portfolio will unchanged. d. none of the above. 21. Which of the following in your bond portfolio will be affected the most by the market interest rate drop? a. 1-year T-note b. 5-year T-note c. 10-year T-note d. 30-year T-bond Questions 19-21 end. Questions 22-26 are based on the following information. CAPM and stock valuation. Your aunt, Beth, plans to invest in the common stock of Smart-investment Corporation. Knowing that you are studying finance, she asks for your suggestion. You calculation shows that yield on Treasury securities is 6%. You know that the S&P 500 Index's expected annual return is 14%. Aunt Beth tells you that this company just paid an annual dividend of $2. After collecting as much information about this firm as possible, you expect the firm's dividend will grow at an annual rate of 7% forever. The stock is sold for $32 per share for the time being. 22. The firm's dividend of next year is expected to be a. $1.75 b. $2.00 c. $2.14 d. $2.44 23. The market risk free rate is a. 6% b. 7% c. 14% 24. The expected return of the market portfolio is a. 6% b. 7% c. 14% 25. The valuation of the stock is a. $32.00 b. $28.57 c. $29.75 d. $30.57 26. Your suggestion to aunt Beth is a. buy this stock because it is underpriced b. do not buy this stock because it is overpriced Questions 22-26 end. 27. If shareholders are granted a preemptive right they will: a. be given the choice of receiving dividends either in cash or in additional shares of stock. b. be paid dividends prior to the preferred shareholders during the preemptive period. c. be entitled to two votes per share of stock. d. have priority in the purchase of any newly issued shares. 28. What market yield is implied by a share of common stock currently selling for $44 whose dividend just paid this year was $2.00 and is expected to grow at an annual rate of 10% forever? a. 6% b. 9% c. 14.5% d. 15%