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You are going to take a $350,000 loan for a home. You have two choices: a 30 year loan at 4.50% interest or a 20

  1. You are going to take a $350,000 loan for a home. You have two choices: a 30 year loan at 4.50% interest or a 20 year loan at 3.60% interest. Compare and contrast.
  2. I looked at my cable bill recently; it was a whopping $770!! How expensive of a car could I purchase if I used the money for a 4 years loan at 3.55%?
  3. What does is mean if bonds are convertible?
  4. The Johnson Corporation issues a bond which has a coupon rate of 15.0%, a yield to maturity of15.55%, a face value of $1,000, and a market price of $950. Therefore, the annual interest payment is?
  5. Name the factors affecting the intrinsic pricing of a bond?
  1. Nunavet Ocean Cruises sold an issue of 10-year $1,000 par bonds to build new ships. The bonds pay 5.5% interest, semiannually. Today's required rate of return is 8.7%. How much should these bonds sell for today? Round off to the nearest $1.
  2. A corporate bond has a coupon rate of 12%, a face value of $1,000, and matures in 5 years. What is the intrinsic price? Is the bond selling at a premium or a discount?
  3. Cabell Corp. bonds pay an annual coupon rate of 15%. If investors' required rate of return is now 12% on these bonds, the ill be priced at? Is the bond selling at a premium or a discount?
  4. How is preferred stock similar to bonds? Similar to common stock?
  5. Whistle Corp. has a preferred stock that pays a dividend of $2.24. If you are willing to purchase the stock at $11, what is your required rate of return? (Round your answer to the nearest .1% and assume that there are no transaction costs.)
  6. List the benefits common stockholders?
  7. Perrine Industrial Inc. just paid a dividend of $6 per share. Future dividends are expected to grow at a constant rate of 8% per year. What is the cost of value of the stock if the required return is 14%
  8. LED Corp.'s common stock paid $2.75 in dividends last year (D0). Dividends are expected to grow at a 15-percent annual rate forever. If LED's current market price is $45.00, and your required rate of return is 19 percent, should you purchase the stock?

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