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 Question 1

Dan
is going to buy a 19-year bond that pays a coupon rate of 11.56% per year, and
has a \$1,000 par value. The bond currently priced at \$1,326.92? What is the
yield to maturity of this bond? Assume annual coupon payments.

Round
the answer to two decimal places in percentage form

All
the work has to be shown!

 Question 2

Try
to determine the required rate of return on Mary Farm Corporation’s common
stock. The firm’s beta is 1.6. The rate on a 10-year treasury bond is 2.38
percent, and the market return is 8.06 percent.

Round
the answers to two decimal places in percentage form.

All
the work has to be shown!

 Question 3

You
hold a portfolio with the following securities:

 Security Percent of portfolio Beta Stock A 23% 1.50 Stock B 48% 1.32 Stock C 29% 1.87

Calculate
the beta portfolio.

Round
the answers to two decimal places.

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the work has to be shown!

 Question 4

Calculate
the expected return on stock:

 State of the economy Probability of the state Percentage returns on stock Economic recession 25% -8.5% Boom 12% 15.6% Steady economic growth 63% 3.4%

Round
the answers to two decimal places in percentage form.

All
the work has to be shown!

 Question 5

The
Black Bear Company just paid an annual dividend of \$5.98. If you expect a
constant growth rate of 8% percent, and have a required rate of return of 12.65
percent, what is the current stock price according to the constant growth
dividend model (Gordon model)?

Round
the answers to two decimal places.

All
the work has to be shown!

 Question 6

You
are considering the purchase of a share of Blue Grass, Inc. common stock. You
expect to sell it at the end of one year for \$87 per share. You will also
receive a dividend of \$5.36 per share at the end of the next year. If your
required return on this stock is 7.39 percent, what is the most you would be
willing to pay for Blue Grass, Inc. common stock now?

Round
the answer to two decimal places.

All
the work has to be shown!

 Question 7

What
is the value of a bond that has a par value of \$1,000, a coupon rate of 17.24
percent (paid annually), and that matures in 8 years? Assume a required rate of
return on this bond is 13.53 percent.

Round
the answer to two decimal places.

All
the work has to be shown!

 Question 8

General
Mills has a \$1,000 par value, 12-year bond outstanding with an annual coupon
rate of 3.60 percent per year, paid semiannually. Market interest rates on
similar bonds are 12.70 percent. Calculate the bond’s price today.

Round
the answer to two decimal places.

All
the work has to be shown!

 Question 9

Black
Water Corp. just issued zero-coupon bonds with a par value of \$1,000. The bond
has a maturity of 25 years and a yield to maturity of 8.29 percent, compounded
semi- annually. What is the current price of the bond?

Round
the answer to two decimal places.

All
the work has to be shown!

 Question 10

What
is the yield to maturity of a 23-year bond that pays a coupon rate of 8.25% per
year, has a \$1,000 par value, and is currently priced at \$1,298.05? Assume
semi-annual coupon payments. Round the answer to two decimal places in
percentage form

All
the work has to be shown!