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1. Mental Corp. has 10% coupon bonds on the market with 4 years to maturity. The bonds make semi-annual payments and currently sell for 114 percent of par. What is the Yield-to-Maturity (YTM) and current yield on Mental Corps bonds?

2. Universal Exports bond has a current price of $800, a par value of $1,000, and matures in 5 years. If interest is paid semi-annually and the yield-to-maturity is 8%, what is the bonds annual coupon rate?

3. Grizzlies Inc. expects to pay $3.00 dividend on its common stock at the end of the year. The dividend is expected to grow 25% a year for the first two years, after which the dividend is expected to grow at a constant rate of 5% a year indefinitely. The stocks beta is 1.2, the risk-free rate of interest is 6%, and the rate of return on the market portfolio is 11%. What is the companys current stock price?

4. Universal Exports is expected to pay the following dividends over the next four years: $8, $4, $2, and $2. Afterwards the company is expected to maintain a constant 4 percent growth rate in dividends. If the required return is 15 percent, what is the maximum that you would be willing to pay for a stock of Universal today?

5. Toyota has preferred stock outstanding that pays a $1.00 quarterly dividend and has a required return of 12% APR. What should the stock be worth today?

6. Winter Time Adventures is going to pay an annual dividend of $2.52 a share on its common stock next year. This year, the company paid a dividend of $2.40 a share. The company adheres to a constant rate of growth dividend policy. If the current stock price is $50, what is the required return for the Winter Time stocks?

7. You recently purchased a stock that is expected to earn 20 percent in a booming economy, 10 percent in a normal economy, and lose 30 percent in a recessionary economy. There is a 5 percent probability of a boom and an 80 percent chance of a normal economy. What is the expected rate of return and standard deviation on this stock?

8. You are comparing stock A to stock B. Given the following information, what is the expected return and risk of a portfolio of A and B where you have invested 40% of your wealth in stock A.

State of Economy	Probability of State of Economy	Rate of Return if State Occurs
Normal	45%	Stock A- 14%, Stock B- 17%
Recession	55%	Stock A- (22%), Stock B- (28%)

( ) = Negative Number

9. Your portfolio is comprised of 40 percent of stock X, 20 percent of stock Y, and the rest in stock Z. Stock X has an expected return of 10%, stock Y has an expected return of 15%, and stock Z has an expected return of 2%. What is the expected return of your portfolio?

10. Your portfolio is comprised of 20% of stock X, 40% of stock Y, and the rest in stock Z. Stock X has an expected return of 12% and stock Y has an expected return of 20%. If the portfolio has an expected return of 18%, what is the expected return of stock Z?