ABC Corp. issued 15-year bonds 2 years ago at
Subject: Business / Finance
Question
QUESTION 1
ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%. The bonds make semi-annual payments. If these bonds currently sell for 97% of par value, what is the YTM?
1 points
QUESTION 2
ABC’s last dividend paid was $1.7, its required return is 18.6%, its growth rate is 7%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?
1 points
QUESTION 3
ABC wants to issue 8-year, zero coupon bonds that yield 9.97 percent. What price should they charge for these bonds if they have a par value of $1,000? That is, solve for PV. Assume annual compounding.
Hint: zero coupon bonds means PMT = 0
1 points
QUESTION 4
ABC Enterprises' stock is expected to pay a dividend of $1.9 per share. The dividend is projected to increase at a constant rate of 8.1% per year. The required rate of return on the stock is 15.5%. What is the stock's expected price 3 years from today (i.e. solve for P3)?
1 points
QUESTION 5
ABC just paid a dividend of D0 = $4.3. Analysts expect the company's dividend to grow by 30% this year, by 22% in Year 2, and at a constant rate of 7% in Year 3 and thereafter. The required return on this stock is 14%. What is the best estimate of the stock’s current market value?
1 points
QUESTION 6
A firm's bonds have maturity of 10 years with a $1000 face value, an 8% semi-annual coupon, are callable in 5 years, at $1,050, and currently sells at a price of $1,100. What is the yield to call (YTC)?
1 points
QUESTION 7
ABC has issued a bond with the following characteristics:
Par: $1,000; Time to maturity: 18 years; Coupon rate: 4%;
Assume annual coupon payments. Calculate the price of this bond if the YTM is 11.9%
1 points
QUESTION 8
A premium bond is a bond that:
has a market price which exceeds the face value.
is callable within 12 months or less.
has a par value which exceeds the face value.
has a face value in excess of $1,000.
is selling for less than par value.
1 points
QUESTION 9
The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the:
nominal rate.
effective rate.
real rate.
current yield.
coupon rate.
1 points
QUESTION 10
If last dividend = $7.3, g = 8.5%, and P0 = $71.1, what is the stock’s expected total return for the coming year?
1 points
QUESTION 11
ABC's bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the bonds are quoted at 106.315 percent of par value. The bonds mature in 8 years. What is the yield to maturity?
1 points
QUESTION 12
ABC Enterprises' stock is currently selling for $62.8 per share. The dividend is projected to increase at a constant rate of 7.5% per year. The required rate of return on the stock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)?
1 points
QUESTION 13
ABC has issued a bond with the following characteristics:
Par: $1,000; Time to maturity: 8 years; Coupon rate: 9%;
Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 9.69%
1 points
QUESTION 14
ABC is expected to pay a dividend of $0.3 per share at the end of the year. The stock sells for $171 per share, and its required rate of return is 13.4%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?
1 points
QUESTION 15
BCD’s $1,000 par value bonds currently sell for $798.40. The coupon rate is 10%, paid semi-annually. If the bonds have 5 years to maturity, what is the yield to maturity?
1 points
QUESTION 16
ABC Company's last dividend was $3.7. The dividend growth rate is expected to be constant at 28% for 2 years, after which dividends are expected to grow at a rate of 5% forever. The firm's required return (rs) is 12%. What is its current stock price (i.e. solve for Po)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
1 points
QUESTION 17
ABC's stock has a required rate of return of 12.8%, and it sells for $60 per share. The dividend is expected to grow at a constant rate of 8.4% per year. What is the expected year-end dividend, D1?
1 points
QUESTION 18
If D1 = $2.1, g (which is constant) = 2.4%, and P0 = $60.5, what is the stock’s expected total return for the coming year?
1 points
QUESTION 19
ABC's Inc.'s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)?
1 points
QUESTION 20
A stock just paid a dividend of D0 = $2.3. The required rate of return is rs = 13%, and the constant growth rate is g = 7.3%. What is the current stock price?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
1 points
QUESTION 21
ABC's last dividend was $2.7. The dividend growth rate is expected to be constant at 30% for 3 years, after which dividends are expected to grow at a rate of 5% forever. If the firm's required return (rs) is 11%, what is its current stock price (i.e. solve for Po)?
1 points
QUESTION 22
Stealers Wheel Software has 5.11% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 107.12% of par. What is the current yield?
1 points
QUESTION 23
A stock is expected to pay a dividend of $2.2 at the end of the year. The required rate of return is rs = 9.6%, and the expected constant growth rate is g = 6.3%. What is the stock's current price?
1 points
QUESTION 24
The 12.47 percent coupon bonds of the Peterson Co. are selling for $1,098.66. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.
Enter your answer in percentages rounded off to two decimal points.
1 points
QUESTION 25
You paid $1,185 for a corporate bond that has a 11.45% coupon rate. What is the current yield?
Hint: if nothing is mentioned, then assume par value = $1,000
1 points
QUESTION 26
The common stock of Connor, Inc., is selling for $62 a share and has a dividend yield of 2.3 percent. What is the dividend amount?
1 points
QUESTION 27
The rate required in the market on a bond is called the:
liquidity premium
call yield
yield to maturity
risk premium
current yield
1 points
QUESTION 28
The 8 percent coupon bonds of the Peterson Co. are selling for 98 percent of par value. The bonds mature in 5 years and pay interest semi-annually. These bonds have a yield to maturity of _____ percent.
1 points
QUESTION 29
The 10.69 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $808.82. What is the current yield?
1 points
QUESTION 30
ABC Inc., is expected to pay an annual dividend of $5.2 per share next year. The required return is 15 percent and the growth rate is 3 percent. What is the expected value of this stock five years from now?
1 points
QUESTION 31
Assume that you wish to purchase a 17-year bond that has a maturity value of $1,000 and a coupon interest rate of 7%, paid semiannually. If you require a 6.48% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond? That is, solve for PV.
1 points
QUESTION 32
If D1 = $2.17, g (which is constant) = 2%, and P0 = $23.41, what is the stock’s expected dividend yield for the coming year?
1 points
QUESTION 33
The common stock of Wetmore Industries is valued at $21.2 a share. The company increases their dividend by 6.2 percent annually and expects their next dividend to be $1.8. What is the required rate of return on this stock?
