Paragraph Name: Alexis Bush Problem Set 2 due 4-17-19 1. (25 pointslTbe estate you've inherited includes a portfolio of several stocks, but you questions about two in particular: A and B. Below are some highlights. Each corporation common shares, no preferred. All common stock is outstanding. Dividends paid Dividends per share Net income Market price of stock Beta of stock $200,000 $o.80 per share $500,000 $18.00 per share .8 $300,000 $o.75 per share $450,000 $23.00 per share 1.3 a. What is earnings per share for each? b. What is the dividend payout ratio for each? c. What is the market capitalization for each stock? d. What is the price to earnings ratio for each? fs Document-Word AYOUT REFERENCES MAILINGS REVIEWVIEW // | Aa. Ilg | -.-I Ete! |||AaBbCcD(1 AaBbCcD( AaBbCt AaBbCct AaB! a-y. A- | . I a-Ed Lukrnal "No Spac Heading 1 Heading 2 Title Styles Paragraph e. Which stock is riskier and why? 2. (10 points) What are the P/E ratios for Coca Cola and Pepsico? (hint: Google them) Pepsice Coca Cola What do these numbers tell you about Coca Cola versus Pepsi? 3, (20 points) A new 10 year corporate bond has a face value of $100,000 and a coupon rate of 8%. By the time the bond is introduced to the market, interest rates have fallen to 7% for bonds of comparable risk and outlook. what is the price of the bond at the 7% market rate of interest? (Hint: I'd use Excel. You may use whatever method you like, but no partial credit if I can't follow what you did.) 4. (15 points) Pauline is the executor of the estate of her friend Charlotte who recently passed away. She has permission from the probate court to rent out Charlotte's property while the estate is getting settled. She rents it to herself. As a beneficiary of Charlotte's estate, what might be an area of concern for you about this arrangement? Why? Document1-Word LAYOUT REFERENCES MAUNGS REVEw vEw Aa - ==|.la-.LTHlorm1No Spac Title Su Heading 1 Heading 2 a-,A- Styles Paragraph 5. (15 points) Martha's will says her estate is to be evenly divided between her three adult children; Caitlyn, Noreen, and Waldo. (Martha has been a widow for many years.) Waldo is executor. After selling off incidentals, Martha's remaining estate consists of $100,000 in cash and some valuable paintings. Waldo decides, as executor, that he will keep the paintings, and give his sisters $50,000 each. Is this the correct path to take? Why? 6. (15 points) Sara was executor for her uncle who died last year. She knew her uncle had received a bill from the IRS for unpaid taxes of $45,000, but she believes that with his death, that debt no longer exists She has dispersed all of her uncle's assets to his beneficiaries (which did not include her). What will likely happen now in this situation
