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HI Finn…here is a set of questions. I have 55 minutes to get it completed.

Thanks!

1. You have just inherited $44,654 and want to use it to fund your retirement in 30 years. If you have estimated that you will need $800,000 to fund your retirement, what rate of interest would you have to earn on your $44,654 investment? (Points : 1)

11.12%
10.10%
9.80%
10.98%

Question 2.2. A stock paid $2.64 in dividends at the end of last year and is expected to pay a cash dividend until infinity. Each year the dividends are expected to grow by 6.6%. Investors require a 9% rate of return. What is the value of the common stock? (Points : 1)

$2.81
$117.26
$4.38
$182.60

Question 3.3. What is the value of a preferred stock with a $32 par value that pays a 7% of par dividend assuming our required return is 8%? (Points : 1)

$28.00
$29.68
$26.36
$27.98

Question 4.4. A preferred stock has an annual dividend of $8.35, and the required rate of return is 5%. What is the value of the preferred stock? (Points : 1)

$170.6
$8.35
$167
$16.7

Question 5.5. A stock paid $3.85 in dividends at the end of last year and is expected to pay a cash dividend until infinity. No growth is expected. Investors require a 6% rate of return. What is the value of the common stock? (Points : 1)

$3.85
$68.02
$64.17
$6.42

Question 6.6. Calculate the value of a $1,000 bond issued with a maturity date 4 years in the future. Its stated semi-annual coupon rate is 3.88%, and its required return rate is 2.60%. (Points : 1)

$1,018.04
$1,099.93
$1,048.33
$1,091.39

Question 7.7. The market price of a bond is $875. The bonds have a 4.25% coupon rate paid annually and mature in six years. What is the current yield for this bond? (Points : 1)

8.9%
4.3%
4.8%
9.2%

Question 8.8. The market price of a bond is $875. The bonds have a 4.25% coupon rate paid annually and mature in six years. What is the yield to maturity for the bonds if an investor buys them at the $875 market price? (Points : 1)

2.33%
6.86%
15.34%
2.30%

Question 9.9. The market price of a bond is $875. The bonds have a 4.25% coupon rate paid semi-annually and mature in six years. What is the yield to maturity (expressed at an annual rate) for the bonds if an investor buys them at the $875 market price? (Points : 1)

3.41%
5.72%
11.44%
6.82%

Question 10.10. One reason bond values can change after issuance is a change in the firm’s ________. (Points : 1)

management team
risk profile
financial team
credit rating

Question 11.11. Over the span of a decade, interest rates climbed. Which of the following statements is TRUE? (Points : 1)

A bond for that decade would out-perform a 5-year bond.
A 20-year bond during that decade would out-perform a 30-year bond.
The 10-year bond has the lowest interest rate risk.
The value of the 5-year bond would rise more dramatically than that of the 10-year bond.

Question 12.12. ________ is the point in time when the firm will pay bondholders the stated amount. (Points : 1)

Coupon rate
Market price
Par value
Maturity date

Question 13.13. Bonds typically have face values that are, or are some multiple of, ________. (Points : 1)

$500
$1000
$800
$600

Question 14.14. Which of the following is NOT a reason why the required return on a bond may differ from its par value? (Points : 1)

The required rate of return is less than the coupon value, so the bond sells at a premium.
The required rate of return exceeds the coupon value, so the bond sells below par value.
The required rate of return exceeds the coupon value, so the bond sells at a premium.
The required rate of return is less than the coupon value, so the bond sells above par value.

Question 15.15. Firms must pay ________ stock dividends before the firm can declare and pay a ________ stock dividend. (Points : 1)

common, preferred
market value, maturity value
preferred, common
maturity value, market value

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