Question 9

Brown, Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of P7.50 per share. If the required return on this preferred stock is 6.5%, at what price should the stock sell?

Group of answer choices

P115.38

P106.95

P104.27

P109.69

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Question 10

A fund manager is holding the following stocks:

Stock	Amount Invested	Beta
1	$300 million	1.2
2	560 million	1.4
3	320 million	0.7
4	230 million	1.8

The risk-free rate is 5 percent and the market risk premium is also 5 percent. If the manager sells half of her investment in Stock 2 ($280 million) and puts the money in Stock 4, by how many percentage points will her portfolios required return increase?

Group of answer choices

0.4%

0.2%

0.22%

2.00%

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Question 11

The constant growth dividend discount model requires which of the following assumptions:

1. Dividends grow at a constant rate
2. The dividend growth rate continues indefinitely
3. The required rate of return is less than the dividend growth rate

Group of answer choices

Statements 1 and 2 only

Statement 1 only

All statements

Statement 3 only

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Question 12

Goode Inc.'s stock has a required rate of return of 11.50%, and it sells for P25.00 per share. Goode's dividend is expected to grow at a constant rate of 7.00%. What was the last dividend, D0?

Group of answer choices

P1.05

P0.95

P1.16

P1.27

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Question 13

Bond Delta was issued at a price of Php1,011.80 which carries a face value of Php1,000.00 and a coupon at 10% p.a., which of the following statements is correct?

Group of answer choices

The market rate of return must be lower than the coupon rate of 10%.

The market rate of return must be equal to the coupon rate of 10%.

The market rate of return must be greater than the coupon rate of 10%.

The yield of the instrument is 9%.

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Question 142.5 pts

The current yield for debt instruments is 8%. Bond A carries a coupon of 7% while Bond B carries a coupon of 9%, both instruments are maturing in 5 years. Which of the following statements on the value of Bonds A and B is correct?

Group of answer choices

Bond A < Bond B

Bond A > Bond B

Bond A = Bond B

Insufficient information

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Question 15

Berg Inc. has just paid a dividend of P2.00. Its stock is now selling for P48 per share. The firm is half as risky as the market. The expected return on the market is 14 percent, and the yield on Treasury bills is 11 percent. If the market is in equilibrium, what rate of growth is expected?

Group of answer choices

8%

4%

13%

10%

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Question 16

Diverse Corporation just paid a dividend of P0.75 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company's beta is 1.25, the required return on the market is 10.50%, and the risk-free rate is 4.50%. What is the company's current stock price?

Group of answer choices

P14.52

P14.89

P15.26

P15.64