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You are considering investing in at least one of the following bond and stock opportunities. To help make your decision you have gathered the following
You are considering investing in at least one of the following bond and stock opportunities. To help make your decision you have gathered the following information.
Option 1: Corporate Bonds
Company | Coupon Rate | Years to Maturity | Coupon Pay,ent | Current market Price per unit |
Acme Ltd. Bonds | 6.30% | 10 | Semi-annual | $1,162.50 |
Venture Inc. Bonds | 4.20% | 5 | Annual | $1,150.00 |
New Stream Corp. | 3.25% | 12 | Quarterly | $310.00 |
Option 2: Preferred Shares
Company | Annual Dividend | Current Market Price per share |
Acme Ltd. | $2.75 | $67.70 |
Venture Inc. | $4.45 | $85.25 |
Option 3: Common Shares
Company | Dividend Growth Rate | Last Dividend Amount | Current Market Price per share |
Acme Ltd. | 3.30% | $4.51 | $89.85 |
Venture Inc. | 3.15% | $2.23 | $109.55 |
New Stream Corp. | 2.87% | $1.79 | $73.50 |
Requirement 1
Determine the yield rates of all the investment options presented. Enter to two decimal places.
Bonds | Preferred Shares | Common Shares | |
ACME Ltd. | % | % | % |
Venture Inc. | % | % | % |
New Stream Corp. | % | % |
Requirement 2
If your required rate of return on all such investments is 6.0%, what is the maximum price you should be willing to pay for each investment? Enter to two decimal places.
Bonds | Preferred Shares | Common Shares | |
ACME Ltd. | $ | $ | $ |
Venture Inc. | $ | $ | $ |
New Stream Corp. | $ | $ |
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