Question No 1:

BA Corp is issuing a 10-year bond with a coupon rate of 8 percent. Th e interest rate for similar bonds is currently 6 percent. Assuming annual payments, what is the value of the bond?

Question No 2:

Pierre Dupont just received a cash gift from his grandfather. He plans to invest in a fi ve-year bond issued by Venice Corp. that pays an annual coupon of 5.5 percent. If the current market rate is 7.25 percent, what is the maximum amount Pierre should be willing to pay for this bond?

Question No 3:

Knight, Inc., has issued a three-year bond that pays a coupon of 6.10 percent. Coupon payments are made semiannually. Given the market rate of interest of 5.80 percent, what is the market value of the bond?

Question No 4:

Zero coupon bonds: Diane Carter is interested in buying a fi ve-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond?

Question No 5:

Explain why preferred stock is considered to be a hybrid of equity and debt securities.

Question No 6:

The current stock price of Largent, Inc., is $44.72. If the required rate of return is 19 percent, what is the dividend paid by this fi rm if the dividend is not expected to grow in the future?

Question No 7:

Nyeil, Inc., is a consumer products fi rm that is growing at a constant rate of 6.5 percent. Th e firm's last dividend was $3.36. If the required rate of return is 18 percent, what is the market value of this stock if dividends grow at the same rate as the firm?

Question No 8:

Reco Corp. is expected to pay a dividend of $2.25 next year. Th e forecast for the stock price a year from now is $37.50. If the required rate of return is 14 percent, what is the current stock price? Assume constant growth

Question No 9:

X-Centric Energy Company has issued perpetual preferred stock with a stated (par) value of $100 and a dividend of 4.5 percent. If the required rate of return is 8.25 percent, what is the stock's current market price?