Name: Student L.D. MG-670 151 years. What is the present value of the dividends to be received over the next five years if the discount rate is 15 percent? Round final answer to two decimal places.) a. $4.85 b. $5.37 . $5.50 d. $6.14 17. Metasteel Limited Co. has a stable track record with sales that are not expected to grow in the next several years. Its last annual dividend was $5.75. If the required rate of return on similar investments is 18 percent, what is the current stock price? (Round the answer to two decimal places.) a. $103.50 b. $13.50 c. $39.30 d. $31.94 18. You can buy a $1,000 par value bond for S800. The coupon rate is 10% (with annual payments), and there are 10 years before the bond will mature and pay off its $1,000 par value. The price of the bond suggests that the expected return on bonds with this risk is lower than 10%. a. True b. False 19. The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments equal to the price of the bond. a. True b. False 20. If a bond's coupon rate is higher than the market rate of interest, then the bond will sell: a. At a discount b. At a premium c. At par value 21. In calculating the current price of a bond paying semiannual coupons, one needs to: a. Use half the number of years for the number of payments made b. Use double the number of years for the number of payments made c. Use the semiannual coupon d. Use the semiannual rate as the discount rate (interest rate e. B, C, and D 22. Which one of the following statements about zero coupon bonds is NOT true? Zero coupon bonds have no coupon pymts but promise a single payment at maturity Zero coupon bonds must sell for less than similar bonds that make periodic coupon pymts Zero coupon bonds make coupon payments but no principal payment at maturity All of the above a. b. c. d. 14. Cortez, Inc., is expecting to pay out a dividend of $2.50 next year. After that it expects its dividend to grow at 7 percent for the next four years. What is the present value of dividends over the next five-year period if the required rate of return is 10 percent? Round final answer to two decimal places. a. $10.76 b. $11.88 c. $11.50 d. $9.80 15. Next year, Pepsi will pay a dividend of $3.00. It expects to increase its dividend by S0.25 in each of the following three years. If their required rate of return is 14 percent, what is the present value of their dividends over the next four years? Round final answer to two decimal places.) a. $13.50 b. $9.72 c. $12.50 d. $11.63 pay dividends in the next two years either as it recovers from an economic slowdown. Three years from now it expects to pay a dividend of $2.50 and then $3.00 in the following two 16. Blockbuster Video has not paid out any dividend in the last three years. It does not expect to
