Finance -Pluto Inc. recently issued bonds that mature in 10 years

Subject: Business    / Finance
Question
QUESTION 14

Pluto Inc. recently issued bonds that mature in 10 years. The bonds have a par value of $1,000 and a coupon rate of 13%. Coupon payments are made semi-annually. What is the market price of the bond if the yield to maturity is 15%?

$931.14

$912.38

$898.06

$879.16

$846.86

Suppose 1-year T-bills currently yield 8.00% and the future inflation rate is expected to be constant at 3.20% per year. What is the real risk-free rate of return, r*? Disregard any cross-product terms, i.e., if averaging is required, use the arithmetic average.

4.80%

3.20%

8.00%

5.80%

11.20%

2.5 points

QUESTION 15

Zigma Enterprises’ stock just paid $1 in dividend (D0) per share. The dividend is projected to DECREASE at a constant rate of 5% each year in the future. The required rate of return on the stock is 15%. What is one share of this stock worth?

$2.45

$6.42

$4.75

$7.31

$3.30

2.5 points

QUESTION 16

The Samson Company just paid $1.5 in dividend (D0) per share, and that dividend is expected to grow at a constant rate of 6 % per year in the future. The required rate of return on the stock is 13%. What is the company’s current stock price?

$20.41

$21.26

$25.27

$24.38

$22.71

Sydney is considering investing in a bank account that pays a nominal annual interest rate of 5.5%, compounded monthly. If she invests $5,000 at the end of each month, how many months will it take for her account to grow to $100,000?

32.26

8.28

13.98

23.50

19.18