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i need help with homework. can you help! your answers would be verified Homework Assignment for Week 3: 2. What are Zero-coupon bonds? 3. Suppose
i need help with homework. can you help! your answers would be verified
Homework Assignment for Week 3: 2. What are \"Zero-coupon\" bonds? 3. Suppose you see the following bond price quote in the newspaper: McDonalds 5.7% 2039........122.733 What can you tell about this bond from reading the price quote? 4. (calculating the present value of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a yield to maturity (YTM) of 4.201%, what should be its price in the bond market (ie, PV)? 5. (calculating the current yield of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a market price of $1,223.92, what is its current yield? 6. (calculating the YTM of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a market price of $1,223.92, what is its yield to maturity (YTM)? 7. (calculating the YTC of a bond) Assume a callable corporate bond with a face value of $1,000, a coupon interest rate of 5.7%, a market price of $1,223.92, and a call premium of 6%. Assume also that the bond has 24 years to go until it matures, but it is callable after 14 years. What is the bond's yield to call (YTC)? 8. (calculating the present value of a bond with semi-annual coupon interest payments) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7%, paid semiannually, and has a yield to maturity (YTM) of 4.2%, what should be its price in the bond market (ie, PV)? 9. (calculating the YTM of a bond with semiannual interest payments) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7%, paid semiannually, and has a market price of $1,223.92, what is its yield to maturity (YTM)? 10. Define the following terms as they apply to interest rates: a. The real risk-free rate (r*) b. The nominal risk-free rate (Rrf) c. The inflation premium (IP) d. The default risk premium (DRP) e. The liquidity premium (LP) f. The maturity risk premium (MRP) 11. Assume the real risk-free rate is 1%. Assume also that inflation is expected to be 1% in the coming year (year 1), 2% in the next year after that (year 2), and 3% in the year after that (year 3). Assume also that the default risk premium, the liquidity premium, and the maturity risk premium are 0%. Given these conditions, what would be the yield on threeyear treasury bonds today? 12. Suppose the First Bank of St Louis was offering the following rates on certificates of deposit (CDs) this week: Maturity Rate 3 month 6 month 1 year 2 year 3 year 5 year 10 year 20 year 1.50% 1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 3.15% a. Plot the above data on a yield curve. Label the graph and the axes appropriately. b. Comment on the implications of this curve to you, as a potential investor in CDs. FINC 5000 Homework Assignment for Week 4: Chapter 7: For Week 4, please turn in the answers to the following questions: 2. (common stock valuation, constant growth) You've discovered a company that is expected to pay $2.25 dividend at the end of this year. The dividend is expected to grow forever at a constant rate of 4% a year. The required rate of return for this stock is 8%. Given these conditions, what is the estimated market value per share of this stock? 3. (common stock valuation, non-constant growth) You've discovered a company that is expected to pay $2.25 dividend at the end of this year. You estimate the company's dividends will grow 10% next year and then at a constant rate of 4% thereafter. The required rate of return for this stock is 8%. Given these conditions, what is the estimated market value per share of this stock? 4. (Issues with the dividend growth model) What are three issues that must be dealt with when evaluating stocks with the dividend growth model? 5. (The PE model) Imagine you are estimating the market value of Wild West Oil Company's stock, which is not publicly traded. So you decide to use the PE model for your valuation. You observe the following PE Ratio comparisons for your project: Company a. b. c. Exxon-Mobil Chevron ConocoPhillips PE Ratio (from the Internet) 10 11 14 a. What is the implied \"appropriate\" PE for Wild West Oil Company? b. Assuming Wild West Oil Company's EPS is = $3.10, what is your estimate for the market value of the company's stock? 6. (Preferred stock valuation) You have discovered a company which has issued preferred stock with a stated annual dividend of 6% of its par value of $100. The average yield on preferred stock of this type among other companies is 7%. Given these conditions, what is your estimate of the market value of this company's preferred stock? FINC 5000 Homework Assignment for Week 4: Chapter 7: For Week 4, please turn in the answers to the following questions: 2. (common stock valuation, constant growth) You've discovered a company that is expected to pay $2.25 dividend at the end of this year. The dividend is expected to grow forever at a constant rate of 4% a year. The required rate of return for this stock is 8%. Given these conditions, what is the estimated market value per share of this stock? 3. (common stock valuation, non-constant growth) You've discovered a company that is expected to pay $2.25 dividend at the end of this year. You estimate the company's dividends will grow 10% next year and then at a constant rate of 4% thereafter. The required rate of return for this stock is 8%. Given these conditions, what is the estimated market value per share of this stock? 4. (Issues with the dividend growth model) What are three issues that must be dealt with when evaluating stocks with the dividend growth model? 5. (The PE model) Imagine you are estimating the market value of Wild West Oil Company's stock, which is not publicly traded. So you decide to use the PE model for your valuation. You observe the following PE Ratio comparisons for your project: Company a. b. c. Exxon-Mobil Chevron ConocoPhillips PE Ratio (from the Internet) 10 11 14 a. What is the implied \"appropriate\" PE for Wild West Oil Company? b. Assuming Wild West Oil Company's EPS is = $3.10, what is your estimate for the market value of the company's stock? 6. (Preferred stock valuation) You have discovered a company which has issued preferred stock with a stated annual dividend of 6% of its par value of $100. The average yield on preferred stock of this type among other companies is 7%. Given these conditions, what is your estimate of the market value of this company's preferred stockStep by Step Solution
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