Note: Enter your answer rounded off to two decimal points

Question 1

A stock is expected to pay a dividend of $2.4 at the end of the year. The required rate of return is rs = 11.4%, and the expected constant growth rate is g = 7.5%. What is the stock's current price?

Question 2

ABC Enterprises' stock is currently selling for $40.9 per share. The dividend is projected to increase at a constant rate of 3.9% 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)?

Question 3

The common stock of Wetmore Industries is valued at $21.3 a share. The company increases their dividend by 3.3 percent annually and expects their next dividend to be $2.9. What is the required rate of return on this stock?

Question 4

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?

Question 5

ABC's stock has a required rate of return of 13%, and it sells for $51 per share. The dividend is expected to grow at a constant rate of 4.8% per year. What is the expected year-end dividend, D1?

Question 6

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.

Question 7

ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 13 years; Coupon rate: 8%; Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 10.99%

Question 8

The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the:

a)nominal rate.

b)Effective rate

c)Real rate

d)Current yield

e)Coupon rate

Question 9

The 13.74 percent coupon bonds of the Peterson Co. are selling for $1,011.34. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.

Question 10

If D1 = $3.85, g (which is constant) = 2%, and P0 = $89.08, what is the stock’s expected dividend yield for the coming year?

Question 11

ABC’s last dividend paid was $1.1, its required return is 12.4%, its growth rate is 3.6%, 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?

Question 12

The common stock of Connor, Inc., is selling for $31 a share and has a dividend yield of 5 percent. What is the dividend

Question 13

ABC's last dividend was $4.5. The dividend growth rate is expected to be constant at 33% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 14%, what is its current stock price (i.e. solve for Po)?

Question 14

A stock just paid a dividend of D0 = $0.5. The required rate of return is rs = 15.3%, and the constant growth rate is g = 5.9%. What is the current stock price?

Question 15

Stealers Wheel Software has 5.77% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 101.52% of par. What is the current yield?

Question 16

The 6.67 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $857.3. What is the current yield?

Question 17

ABC Inc., is expected to pay an annual dividend of $5.1 per share next year. The required return is 19.2 percent and the

Question 18

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?

Question 19

ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 15 years; Coupon rate: 4%; Assume annual coupon payments. Calculate the price of this bond if the YTM is 9.5%

Question 20

ABC Company's last dividend was $4.5. The dividend growth rate is expected to be constant at 31% for 2 years, after which dividends are expected to grow at a rate of 6% forever. The firm's required return (rs) is 12%. What is its current stock price (i.e. solve for Po)?

Question 21

A premium bond is a bond that:

a)has a par value which exceeds the face value.

b)is callable within 12 months or less.

c)has a market price which exceeds the face value.

d)has a face value in excess of $1,000.

e)is selling for less than par value.

Question 22

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)?

Question 23

ABC wants to issue 12-year, zero coupon bonds that yield 8.63 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

Question 24

ABC is expected to pay a dividend of $1.7 per share at the end of the year. The stock sells for $148 per share, and its required rate of return is 17.9%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?

Question 25

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)?

Question 26

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 8.74% 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.

Question 27

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

Question 28

If last dividend = $4.8, g = 4.7%, and P0 = $67.2, what is the stock’s expected total return for the coming year?

Question 29

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?

Question 30

ABC just paid a dividend of D0 = $0.8. Analysts expect the company's dividend to grow by 32% this year, by 24% in Year 2, and at a constant rate of 6% in Year 3 and thereafter. The required return on this stock is 9%. What is the best estimate of the stock’s current market value?

Question 31

The rate required in the market on a bond is called the:

a)call yield

b)liquidity premium

c)current yield

d)risk premium

e)yield to maturity

Question 32

If D1 = $3.2, g (which is constant) = 2.6%, and P0 = $60.1, what is the stock’s expected total return for the coming year?

Question 33

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 6.1% per year. The required rate of return on the stock is 17.8%. What is the stock's expected price 3 years from today (i.e. solve for P3)?