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20 Cards in this Set
- Front
- Back
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What is the value of a $1,000 par value bond with 11 years to maturity that has a 9% coupon rate? Assume annual interest payments and the market rate on similar risk bonds is 7.5%.
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$1,109.73 FV = -$1,000; N = 11; I/Y = 7.5; PMT = $90; CPT PV |
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ABC Company is issuing semiannual coupon bonds with an annual coupon rate of 5%. It is a 20-year bond with a par value of $1,000 and a YTM of 10%. What is the price of the bond?
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$571
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Mary wants to buy a 15-year zero-coupon bond with a $1,000 par value. If the YTM on this bond is 11%, what is the most that she should pay for this bond?
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$209
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If the 15-year zero-coupon bond with a $1,000 par value in the previous problem were selling for $237.54, it's YTM would be
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10.06%
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Eighteen years ago, Beluga Corporation issued 30-year 8% semiannual coupon bonds at par. Since that time, interest rates have declined so that if Beluga wanted to sell bonds today at par, they would be able to offer a coupon rate of only 4%. What would be the price today of the bonds that Beluga issued 18 years ago?
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$1,378.28
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Tidbit, Inc.has $1,000 par value semiannual coupon bonds with an annual coupon rate of 6% and mature in 12 years. If the bonds are selling for $1,150.36, what is the APPROXIMATE YTM on these bonds?
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4.35%
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Consider the following: A 20-year $1,000 par value bond with a coupon rate of 5% is selling for $1,235.98. Is 6% the YTM of this bond?
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No, the YTM is lower than 6%
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You have the following assets: IBM Stock = $10,000; Car = $20,000; House = $250,000; Bank account = $15,000. What is the maximum you could lose from the satisfaction of claims of others against IBM?
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$10,000
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You expect a share of stock to pay dividends of $1.00, $1.50, and $2.00 per share over the next three years. You also think that you'll be able to sell the stock after 3 years for $25.40 per share. If you want to earn an annual return of 8%, what is the most that you would be willing to pay today for a share of this stock?
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$23.96
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The ABC Company just paid an annual dividend of $2.50 that is expected to increase at 3% per year hereafter. If you want to earn an annual return of 10%, what is the most that you would be willing to pay for a share of this stock today?
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$36.79 |
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XYZ Corporation just paid a dividend of $2.10 per share. Dividends are expected to grow at an annual rate of 15% for the next three years and then at an annual rate of 4% thereafter. If your required return is 9%, what is the most that you would be willing to pay for a share of XYZ stock today?
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$58.26
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CheatU Motors pays a $1.77 preferred dividend every quarter and will maintain this policy forever. What is the most that you should be willing to pay for a share of CheatU's preferred stock if you want to earn an annual return of 9.25%?
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$76.54
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Blah Blah, Inc. has a 12% required rate of return. It does not expect to initiate dividends for fifteen years at which time it will pay $2.00 per share in dividends. At that time, Blah Blah expects it dividends to grow at a rate of 7% thereafter. If you currently own the stock and expect to sell it following the first dividend payment, what is the estimated price at which you could sell the stock?
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1. $42.80
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Blah Blah, Inc. has a 12% required rate of return. It does not expect to initiate dividends for fifteen years at which time it will pay $2.00 per share in dividends. At that time, Blah Blah expects it dividends to grow at a rate of 7% thereafter. If you currently own the stock what is the estimated price at which you could sell the stock TODAY?
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$8.18
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Marie bought a share of stock for $45 that paid a dividend of $0.50 and sold it one year later for $50. What is Marie's HPR? |
12.22%
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You earn returns of 8% over 15 months and 3% over 5 months. What are your simple annual returns, respectively? |
6.4%; 7.2%
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You earn returns of 8% over 15 months and 3% over 5 months. What are your compound annual returns, respectively? |
6.35%; 7.35% |
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Asset A has E(r) = 15% and σ = 9%. Asset B has E(r) = 14% and σ = 11%. Which asset would a rational risk-averse investor prefer? |
Asset A
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A firm's stock is only half as risky as the market on average. If the risk-free rate is 3% and the expected return on the market is 10%, according to CAPM what would be the required rate of return for a share of this stock? |
6.5%
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A firm's stock is only half as risky as the market on average. If the risk-free rate is 3% and the expected return on the market is 10%, according to CAPM what would be the most that you should be willing to pay for a share of this firm's stock if you expected it to pay a dividend of $1.50 a share indefinitely? |
$23.08 |
