Question 23 The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years. The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually. Assuming that this bond trades for $903, then the YTM for this bond is closest to: A. 8.0% B. 6.8% C. 9.9% D. 9.2% E. I choose not to answer qua Question 21 Stock P and Stock Q have had annual retums of -10 percent, 12 percent, and 28 percent, and 8 percent, 13 percent, and 24 percent, respectively. Calculate the covariance of return between the securities. (Ignore the correction for the loss of a degree of freedom.) A. -0.00149 B. 0.00149 C. 0.009933 D. -0.0100 E. I choose not to answer Question 25 Nielson Motors has a share price of $25 today. If Nielson Motors is expected to pay a dividend of $0.75 this year, and its stock price is expected to grow to $26.75 at the end of the year, then Nielson's dividend yield and equity cost of capital are: A. 3.0% and 7.0% respectively. B. 3.0% and 10.0% respectively. C. 4.0% and 6.0% respectively. D. 4.0% and 10.0% respectively. E. I choose not to answer Question 26 You expect that Bean Enterprises will have earnings per share of $2 for the coming year. Bean plans to retain all of its earnings for the next three years. For the subsequent two years, the firm plans on retaining 50% of its earnings. It will then retain only 25% of its earnings from that point forward. Retained earnings will be invested in projects with an expected return of 20% per year. If Bean's equity cost of capital is 12%, then the price of a share of Bean's stock is closest to: A. $17.00 B. $10.75 - C. $27.75 D. $43.50 E. I choose not to answer Question 28 Given the following financial asset information: "Eenie" "Meenie" "Miney" "Moe" Bota 10.45 0.75 1.05 1.20 Volatility 20% 18% 35% 25% Assume that the risk-free rate of interest is 3% and you estimate the market's expected return to be 9%. The risk premium for "Meenie" is closest to: A. 4.50% B. 7.50% C. 9.30% D. 9.75% E. I choose not to answer Question 29 Rearden Metal needs to order a new blast furnace that will be delivered in one year. The $1,000,000 price for the blast furnace is due in one year when the new furnace is installed. The blast furnace manufacturer offers Rearden Metal a discount of $50,000 if they pay for the furnace now. If the interest rate is 7%, then the NPV of paying for the fumace now is closest to: A. -$15,421 B. $15,421 C. -$46,729 D. $46,729 E. I choose not to
