Question 37

Kollo Enterprises has a beta of 0.70, the real risk-free rate is 2.00%, investors expect a 3.00% future inflation rate, and the market risk premium is 4.70%. What is Kollo's required rate of return? Do not round your intermediate calculations

Group of answer choices

7.96%

6.47%

7.30%

8.29%

Question 38

Taussig Corp.'s bonds currently sell for $960. They have a 6.35% annual coupon rate and a 20-year maturity, but they can be called in 5 years at $1,067.50. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. Under these conditions, what rate of return should an investor expect to earn if he or she purchases these bonds?

Group of answer choices

6.52%

6.72%

5.98%

7.46%

Question 39

Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest rate (r_d) is 5.00%, based on semiannual compounding. What is the bonds price?

Group of answer choices

$1,235.47

$1,050.15

$1,457.85

$976.02

Question 40

Adams Enterprises noncallable bonds currently sell for $910. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity?

Group of answer choices

11.21%

8.60%

9.95%

9.66%