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10 Cards in this Set
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- Back
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1. Butler Corp paid a dividend of $3.50 per share. The dividend is expected to grow at a constant rate of 8% per year. If Butler Corp. Is selling for $75.60 per share, the stockholders' expected rate of return is _________ |
1. Butler Corp paid a dividend of $3.50 per share. The dividend is expected to grow at a constant rate of 8% per year. If Butler Corp. Is selling for $75.60 per share, the stockholders' expected rate of return is _________ |
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2. Emery Inc. has a beta equal to 1.5 and a required return of 14 % based on the CAPM. If the risk free rate of return is 2%, the expected return on the market portfolio is _______________.
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2. Emery Inc. has a beta equal to 1.5 and a required return of 14 % based on the CAPM. If the risk free rate of return is 2%, the expected return on the market portfolio is _______________.
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3. The capital asset pricing model _________.
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3. The capital asset pricing model _________.
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4. Stock A has an expected return of 14 % with a standard deviation of 6%. If returns are normally distributed, then approximately two-third of the time the return on Stock A will be _______.
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4. Stock A has an expected return of 14 % with a standard deviation of 6%. If returns are normally distributed, then approximately two-third of the time the return on Stock A will be _______.
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5. A corporate coup bond has a coupon rate of 9%, a face value of $1,000, and matures in 15 years. Which of the following statements in most correct?
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5. A corporate coup bond has a coupon rate of 9%, a face value of $1,000, and matures in 15 years. Which of the following statements in most correct?
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6. Investment A has an expected rate of return of 15 % per year, while investment B has an expected rate of return of 12 % per year. A rational investor will choose _________.
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6. Investment A has an expected rate of return of 15 % per year, while investment B has an expected rate of return of 12 % per year. A rational investor will choose _________.
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7. A financial analyst tells you that investing in stocks will allow you to triple your money in 15 years. What annual rate of return is the analyst assuming you can earn?
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7. A financial analyst tells you that investing in stocks will allow you to triple your money in 15 years. What annual rate of return is the analyst assuming you can earn?
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8. SWH Corporation issued bonds on January 1, 2004. The bonds had a coupon rate of 4.5%, with interest paid semiannually. The face of the bonds is $1,000 and the bonds mature on January 1, 2014. What is the intrinsic value [to the nearest dollar] of an SWH Corporation bond on January 1, 2008 to an investor with a required return of 6%?
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8. SWH Corporation issued bonds on January 1, 2004. The bonds had a coupon rate of 4.5%, with interest paid semiannually. The face of the bonds is $1,000 and the bonds mature on January 1, 2014. What is the intrinsic value [to the nearest dollar] of an SWH Corporation bond on January 1, 2008 to an investor with a required return of 6%?
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9. Which of the following statements concerning stock valuation is most correct?
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9. Which of the following statements concerning stock valuation is most correct?
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10. You are 21 years old today. Your grand parents set up a fund that will pay you $25,000 per year for 20 years, starting on your 65th birthday to supplement your retirement. If the trust can earn 7.5% per year, how much will your grand parents need to put in the trust fund today [rounded to the nearest ten dollars]?
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10. You are 21 years old today. Your grand parents set up a fund that will pay you $25,000 per year for 20 years, starting on your 65th birthday to supplement your retirement. If the trust can earn 7.5% per year, how much will your grand parents need to put in the trust fund today [rounded to the nearest ten dollars]?
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