Question

1. A 6.9% coupon bearing bond pays interest semi-annually and has a maturity of 19 years. If the current price of the bond is $968.17, what is the yield to maturity of this bond? (Answer to the nearest tenth of a percent, e.g. 12.34%)

5 points   

QUESTION 16

1. A bond has a coupon rate of 6.20% and pays interest semi-annually. If the bond has a maturity of 25 years and is currently priced at $819.53, what is the annual yield to maturity of this bond?

   	a.	3.93%
   	b.	5.44%
   	c.	6.20%
   	d.	6.44%
   	e.	7.60%
   	f.	7.86%
   	g.	8.20%
   	h.	15.20%
   	i.	The yield to maturity cannot be determined with the information given.

5 points   

QUESTION 17

1. A bond has a coupon rate of 8% and pays interest semi-annually. If the bond has a maturity of 20 years and is currently priced at $1,408.49, what is the annual yield to maturity of this bond?

   	a.	3.82%
   	b.	4.80%
   	c.	5.47%
   	d.	6.00%
   	e.	6.44%
   	f.	7.24%
   	g.	9.44%
   	h.	14.08%
   	i.	The yield to maturity cannot be determined with the information given.

5 points   

QUESTION 18

1. A company just paid a dividend of $0.81 per share and you expect the dividend to grow at a constant rate of 4.1% per year indefinitely into the future. If the required rate of return is 12.4% per year, what would be a fair price for this stock today? (Answer to the nearest penny per share.)

5 points   

QUESTION 19

1. A company has announced that it will pay a dividend of $0.91 per share next year, and thereafter you expect the dividend to grow at a constant rate of 4.3% per year indefinitely into the future. If the required rate of return is 10.4% per year, what would be a fair price for the stock today? (Answer to the nearest penny.)

5 points   

QUESTION 20

1. A company just paid a dividend of $1.30 per share. The consensus forecast of financial analysts is a dividend of $1.50 per share next year and $2.30 per share two years from now. Thereafter, you expect the dividend to grow 7% per year indefinitely into the future. If the required rate of return is 8% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)

5 points   

QUESTION 21

1. A company just paid a dividend of $1.60 per share. You expect the dividend to grow 12% over the next year and 10% two years from now. After two years, you have estimated that the dividend will continue to grow indefinitely at the rate of 6% per year. If the required rate of return is 14% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)

5 points (Extra Credit)   

QUESTION 22

1. A company just paid a dividend of $1.20 per share. The consensus forecast of financial analysts is a dividend of $1.90 per share next year, $2.10 per share two years from now, and $2.60 per share in three years. You expect the price of the stock to be $39 in two years. If the required rate of return is 9% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)

Answer 1