Q. 1 - A bond with semi-annual coupon payments of $1100 has 5 years to maturity and a yield to maturity

of 8%: If the price of this bond is $18202:61, what is its face value?

A) $20292:34

B) $13737:59

C) $17830:71

D) $20340:95

E) $20467:12

 

Q 2 - A bond,which is currently trading at $3440, has four years to maturity, a $4000 face value, and a 3.5%

coupon rate with annual coupons. Which of the following is its approximate yield to maturity?

A) 3.84%

B) 3.5%

C) 7.7%

D) 5%

E) 3.01%

 

Q 3 - Canadian Tire just announced that it plans to reduce its dividend from $2.50 to $1.50 per share

and use the extra funds to expand its operations. Prior to this announcement, Canadian Tire.s dividends

were expected to grow at 4% per year and Canadian Tire.s stock was trading at $25.00 per share. With

the new expansion, Canadian Tire.s dividends are expected to grow at 8% per year inde.nitely. Assuming

that Canadian Tire.s risk is unchanged by the expansion, the value of a share of Canadian Tire after the

announcement is approximately:

A) $25.00

B) $15.00

C) $31.25

D) $27.50

E) $29.75