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Part 5, A or B or AB, 14 points, 1 point each Answer 'A' or 'B' or 'As for each of the followine. Put your answer in the nowing. Put your answer in the column to the right. Stock A has a PEG of 8 Stock Bhas PEG f 12. Which stock should you shon 36. Company A has payout of 60 and Company has the higher dividend? Hany A has payout of 60 and Company has a pavout of 40. All else equal, which company Stock A has a required return of 11 Sochas a required return of 9%. Both stocks have a holding period return of 10% which stock should you buy? Stock A has a P-E of 18, Stock Bhas a P. of 20 both stocks have a PEG of 9, which stock most likely has more growth? Bond A sells at par. Bond B sells at a premium. Both bonds have a time to maturity of 10 years and a coupon of 8%. Which band has more interest rate risk? Bond A has 20 years to maturity and Bond B has 10. If interest rates go up, all else equal, which bond will have the greater price decrease? All else equal, if Bond A has a yield to maturity of Bond B has a yield to maturity of 9% interest rates decrease, which bond will have a greater capital gain? 42. 43. 44 Bond A pays an annual coupon of $100. Bond B pays $40 coupon payments semi-annually. All else equal, which bond has the higher duration? Bond A is a discount bond. Bond B is a premium bond. All else equal, if interest rates remain the same, which bond's price is expected to increase over the next year? Bond A is a corporate bond. Bond B is a municipal bond. All else equal, if you are in a very high tax bracket, which bond should you choose? Yield A is a promised yield. Yield B is an expected yield. For a company recently experiencing financial distress, which yield is most likely to be greater? Bond A is callable and Bond B is not. Bond A has a coupon of 8.3% and Bond Bhas a coupon of 8%. Both bonds are currently selling at par value. If you expect interest rates to rise, which bond should you choose? Bond A is a par bond. Bond B is a discount bond. If interest rates are expected to fall, all else equal, which bond is more likely to be called? Bond A has a coupon rate of 2% and a yield of 3%. Bond B has a coupon rate of 2% and a yield of 1.5%, which one has the higher price? 46. 47. Part 6, Risk Classification, 8 points, 2 point each. Below are 5 news events that occurred on December 14, 2018. Classify each of them as systematic (5) or unsystematic (U) and determine whether the information will cause an increase (I) or decrease (D) in prices. S/U VD 49. North Korea condemns U.S. sanctions, warns denuclearization at risk. 50. XPO To Repurchase Up To $1B in Stock. 51. Yield Curve Inverted for the First Time in Years. 52. New report claims Johnson & Johnson knew of asbestos in products