Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help me!!!!!!!! PAPERB Student No. FINC2000FINANCIAL MANAGEMENT PARTI MULTIPLE CHOICES (30%) A. par 1. The Sisyphean Company has a bond outstanding with a face

please help me!!!!!!!!
image text in transcribed
PAPERB Student No. FINC2000FINANCIAL MANAGEMENT PARTI MULTIPLE CHOICES (30%) A. par 1. The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 5 years. The bond certificate indicates that the stated coupon rate for this bond is 10.0% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 7.5%, then this bond will trade at C. a premium B. a discount D. nonc of the above 2. A risk-free, zero-coupon bond with a $5000 face value has 15 years to maturity. The bond currently trades at $3750. What is the yield to maturity of this bond? A. 1.936% C. 62.50096 B 0.968% D. 75.000 3. The table below shows the yields to maturity on a number of two-year, zero-coupon securities. What is the credit spread on a two-year, zero-coupon corporate bond with a B rating? Security: Treasury AAA Corporate BBB Corporate B Corporate Yield (%): 5.2 5.4 6.8 7.2 A. 2.4% C. 2.8% B. 2.0% D. 1.6% 4. Sultan Services has 1.2 million shares outstanding. It expects earnings at the end of the year of $6.0 million. Sultan pays out 60% of its earnings in total: 40% paid out as dividends and 20% used to repurchase shares. If Sultan's carnings are expected to grow by 5% per year, these payout rates do not change, and Sultan's equity cost of capital is 10%, what is Sultan's share price? A. S12.00 C. $36.00 B. $24.00 D. $60.00 5. You expect KT industries (KTT) will have earnings per share of $5 this year and expect that they will pay out $1.25 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 13% and their equity cost of capital is 15%. The expected growth rate for KTI's dividends is closest to A. 11.3% C. 5.9% B.9.8% D. 3.9% 6. Which of the following statements is FALSE of the dividend-discount model (DDM)? A. We cannot use the DDM to value the stock of a firm with rapid or changing growth. B. As firms mature, their growth slows to rates more typical of established companies. C. The dividend-discount model values the stock based on a forecast of the future dividends paid to shareholders. D. The simplest forecast for the firm's future dividends states that they will grow at a constant rate, i.e., forever

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Developments In Entrepreneurial Finance And Technology

Authors: David B. Audretsch, Maksim Belitski, Nada Rejeb, Rosa Caiazza

1st Edition

1800884338,1800884346

More Books

Students also viewed these Finance questions

Question

If so, why do you think it had that effect?

Answered: 1 week ago