Management Services

1. A 1,000 Treasury bills with 91 days period can be purchased at 995. What is the annualized discount rate?

1.98%

60%

5%

2%

2. Find the value of 1,000 bonds with annual interest rate of 5% making semiannual interest payment for 2 years, after which the bonds matures and principal must be repaid. Yield to maturity is 3%.

981.42

1,000

888.49

92.93

3. X Corp paid dividends to OS last year by 2.20 per share. The current market price of Ordinary Shares is 40 per share and investors expect that dividend to grow by 6% by next year. Cost to issue OS is 5% of market value. What is the cost of new common stock?

11.83%

11.79%

12.14%

11.50%