The price of a stock in the market is $75. You know that the firm has just
Question:
9.7% |
9.5% |
9.3% |
9.1% |
8.9% |
She believes the company has become riskier, and therefore increases her required rate of return for the stock |
She increases her estimate of the company's next year's dividend |
She increase her estimate of the expected annual rate of growth in the company's dividends |
She decreases her required rate of return for the stock |
None of the above would cause her to decrease her estimate of the stock's value |
Interest rates have increased. |
Expected future earnings for firms have increased. |
Expected future earnings for firms have decreased. |
Both a and b are true. |
Both a and c are true. |
The bond is selling at a discount |
The bond is selling at par |
The bond is selling at a premium |
The bond is selling at book value |
Insufficient information |
$968 |
$731 |
$1,000 |
$25,000 |
This problem cannot be worked without the annual interest payments provided. |
The price of the zero coupon bond would increase, but the price of the 12% coupon bond would decrease. |
The price of the zero coupon bond would decrease, but the price of the 12% coupon bond would increase. |
Both issues would increase in price. |
Both issues would decrease in price. |
None of the above are necessarily true. |
A consol |
An income bond |
A convertible bond |
A callable bond |
A zero-coupon bond |
Pharsalus Inc. just paid a dividend (i.e., D0) of $ 4.06 per share. This dividend is expected to grow at a rate of 5.6 percent per year forever. The appropriate discount rate for Pharsalus's stock is 15.9 percent. What is the price of the stock? (Round your answer to 2 decimal places and record your answer without dollar sign or commas). Your Answer:Question 7 options:
Save Question 8(7 points)
The stock of Robotic Atlanta Inc. is trading at $ 32.50 per share. In the past, the firm has paid a constant dividend (i.e., g = 0) of $ 5.06 per share and it has just paid an annual dividend (i.e., D0 = 5.06 ). However, the company will announce today new investments that the market did not know about. It is expected that with these new investments, the dividends will grow at 5.5 % forever. Assuming that the discount rate remains the same, what will be the price of the stock after the announcement? (Round your answer to 2 decimal places and record your answer without dollar sign or commas). Your Answer:Question 8 options:
Save Question 9(6 points)
Assume that Bond A and Bond B are identical in every way except for the coupon rate (i.e., both bonds have the same par value, maturity, and yield to maturity or required rate of return). Bond A has a 12% coupon rate and Bond B is a zero coupon bond. Both Answer |
Answer |
If you use the constant dividend growth model to value a stock (that is, the equation, Price = D1/(r-g)), which of the following is certain to cause you to increase your estimate of the current value of the stock?
Question 1 options:Decreasing the required rate of return for the stock. |
Decreasing the estimate of the amount of next year's dividend. |
Decreasing the expected dividend growth rate. |
An announcement that the CFO has been fired. |
none of the above |
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Question 2(7 points)
GRITO stock is currently selling for $46.10 a share. If the company
is expected to pay a dividend of $5.60 a year from now and dividends
are not expected to grow thereafter, what is the market
capitalization rate (or, required rate of return) for a share of
GRITO stock?
Question 2 options:7.56% |
8.23% |
10.50% |
12.15% |
Question 3(7 points) Calculate the current price of a $1,000 par value bond that has a coupon rate of 7 percent, pays coupon interest annually, has 12 years remaining to maturity, and has a current yield to maturity (discount rate) of 15 percent. (Round your answer to 2 decimal places and record without dollar sign or commas). Your Answer:Question 3 options:
Answer |
Answer |