Question
Question 1 The next dividend payment by A Company will be $1.73 per share. The dividends are anticipated to maintain a 0.06% growth rate forever.
Question 1
The next dividend payment by A Company will be $1.73 per share. The dividends are anticipated to maintain a 0.06% growth rate forever. If the stock currently sells for $16.44 per share, what is the investors' required return rate? (Round the final answer to 4 decimal places.)
Question 2
You have an 0.066% semiannual-pay bond with a face value of $1,000 that matures in 11 years. If the yield is 0.09%, what is the price of this bond? Round your answer to 2 decimal points.
(Please note the percentage is express in decimals in this question, e.g. 14% is expressed as 0.14%)?
QUESTION 3
- Shareholders of convertible preferred stock generally have the:
A. | Obligation to convert their shares into callable shares of common stock. | |
B. | Right to convert their shares into shares of common stock. | |
C. | Right to convert their shares into bonds with an equivalent yield-to-maturity. | |
D. | Obligation to convert their shares into shares of common stock. | |
E. | Right to convert their shares into cash at par value at their discretion. |
QUESTION 4
- Which type of bond allows the issuer to buy back the bonds before maturity?
A. | Retractable bond. | |
B. | Convertible bond. | |
C. | Zero-coupon bond. | |
D. | Callable bond. | |
E. | High yield bond. |
QUESTION 5
- A supernormal growth stock generally:
A. | Has dividends that grow at a high rate for the life of the stock. | |
B. | Is valued using the preferred stock valuation technique. | |
C. | Is associated with a company that is experiencing rapid contraction. | |
D. | Has high growth dividends only for a limited number of years. | |
E. | Tends to increase its dividends per share by 30% or more for an extended number of years. |
QUESTION 6
- Which one of the following will increase the present value of an annuity?
A. | Payment of annuity in the end instead of payment at the beginning. | |
B. | Lowering the discount rate. | |
C. | Reducing the future value of the cash flow. | |
D. | Increasing the number of payments. | |
E. | Lowering the payment amount. |
QUESTION 7
- Which is the best definition of a perpetuity?
A. | The interest rate charged per period multiplied by the number of periods per year. | |
B. | An annuity for which the cash flows occur at the beginning of the period. | |
C. | An annuity in which the cash flows continue forever. | |
D. | A level stream of cash flows for a fixed period of time. | |
E. | A constant stream of cash flows without end that is expected to rise indefinitely. |
QUESTION 8
- Which is the best definition of an effective annual rate (EAR)?
A. | The interest rate expressed as if it were compounded once per year. | |
B. | A level stream of cash flows for a fixed period of time. | |
C. | An annuity for which the cash flows occur at the beginning of the period. | |
D. | The interest rate expressed in terms of the interest payment made each period. Also, quoted interest rate | |
E. | The interest rate charged per period multiplied by the number of periods per year. |
QUESTION 9
- Which one of the following statements is true concerning bond ratings?
A. | Bond ratings are based on both the risk of default and the interest rate risk. | |
B. | All else equal, a bond rated BB should pay a higher return than a bond rated B. | |
C. | A bond rated BBB or lower is considered a junk bond. | |
D. | Bond ratings are based only on the risk of default. | |
E. | By mutual agreement, DBRS and Standard & Poor's issue comparable ratings on all bonds. |
QUESTION 10
- When a bondholder is granted the right to force the issuer to repay the bond prior to maturity, the bond:
A. | Contains a zero-out provision. | |
B. | Contains a call provision. | |
C. | Contains a put provision. | |
D. | Is a convertible bond. | |
E. | Is an income bond. |
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