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##### Final Finance 28 Questions

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Question;Top of Form;Question 1;1. ABC?s last dividend paid;was $7.18, its required return is 16%, its growth rate is 4%. What is ABC's;expected stock price in 19 years?;Note: Enter your answer rounded off to two;decimal points. Do not enter $ or comma in the answer box. For example, if your;answer is $12.345 then enter as 12.35 in the answer box.;1 points;Question 2;1. If the market value of;debt is $109,892, market value of preferred stock is $43,935, and market value;of common equity is 140,171, what is the weight of preferred stock?;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 3;1. Suppose the nominal rate;is 19.2% and the inflation rate is 6.6%. Solve for the real rate.;Use the Fisher Equation to get your anser.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 4;1. The ABC Co. has $1,000;face value stock outstanding with a market price of $1,169.9. The stock pays;interest annually, matures in 7 years, and has a yield to maturity of 11;percent. What is the annual coupon amount?;Note: Enter your answer rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 5;1. Suppose that today's;stock price is $45.8. If the required rate on equity is 12.8% and the growth;rate is 5.6%, compute the expected dividend (i.e. compute D1);Note: Enter your answer rounded off to two;decimal points. Do not enter $ or comma in the answer box. For example, if your;answer is $12.345 then enter as 12.35 in the answer box.;1 points;Question 6;1. Below is the stock split;data for ABC Company;Stock;splits;31-Dec-90;31-Dec-91;4 for 1;31-Dec-92;31-Dec-93;5 for 2;31-Dec-94;31-Dec-95;31-Dec-96;1.5 for 1;31-Dec-97;31-Dec-98;2 for 1;31-Dec-99;If you bought 7,908 shares in the beginning of;1990 and during the period of 10 years never bought or sold additional shares;how many shares would you have by the end of 1999?;Enter your answer rounded off to two decimal;points.;1 points;Question 7;1.;The ABC Company has a cost of equity of 10.1 percent, a pre-tax;cost of debt of 5.3 percent, and a tax rate of 29 percent. What is the firm?s;weighted average cost of capital if the weight of debt is 59 percent?;Note: Enter your answer in precentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 8;1. Standard deviation measures;total risk;unsystematic risk;systematic risk;economic risk;diversifiable risk;1 points;Question 9;1. The risk-free rate is;4.8%, the market risk premium is 9.2%, and the stock?s beta is 0.92. What is;the cost of common stock?;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 10;1. You want to create a;portfolio as risky as the market. Suppose you invest your money in Stocks A, B;C, and the risk-free asset. What is the weight of Stock C in your portfolio?;Stock Weights(%) Beta;A 22 1.2;B 21 0.6;C? 1.6;Rf??;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 11;1. Based on the following;data, calculate the returns for June 2014;Year;Month;Div;Price;2012;May;$0.50;$14.96;2012;June;$0.60;$18;2012;July;$0.70;$22.12;Enter your answer in percentages rounded off to;two decimal points.;1 points;Question 12;1. Suppose the exchange;rate is $1.3695 per euro. If the euro appreciates by 20% against the dollar;how many euros would a dollar buy tomorrow?;Enter your answer rounded off to FOUR decimal;points. Do not enter any currency unit in the answer box.;1 points;Question 13;1.;You have a portfolio of two risky stocks which turns out to have;no diversification benefit. The reason you have no diversification is the;returns;are completely unrelated to one another.;are;too small.;move perfectly with one another.;move perfectly opposite of one another.;are too large to offset.;1 points;Question 14;1. One year ago, you;puchased 86 shares of ABC stock for $23.3 per share. During the year, you;received a dividend of $2.9 per share. Today, you sold all your shares for;$27.3. What are the percentage return on your investment?;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 15;1. You have observed the;following returns on ABC's stocks over the last six years;7.8%, 7.3%, 4%, -8.5%, 11.8%, -6.6%;What is the geometric average returns on the;stock over this six-year period.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 16;1.;A stock just paid a dividend of D0 = $1.1. The required;rate of return is rs = 14.2%, and the constant growth rate is g =;4.1%. What is the current stock price?;Note: Enter your answer rounded off to two;decimal points. Do not enter $ or comma in the answer box. For example, if your;answer is $12.345 then enter as 12.35 in the answer box.;1 points;Question 17;1.;ABC Company's last dividend was $0.8. The dividend growth rate is;expected to be constant at 6% for 3 years, after which dividends are expected;to grow at a rate of 3% forever. The firm's required return (rs) is;10%. What is its current stock price (i.e. solve for Po)?;Note: Enter your answer rounded off to two;decimal points. Do not enter $ or comma in the answer box. For example, if your;answer is $12.345 then enter as 12.35 in the answer box.;1 points;Question 18;1. ABC company?s market;value of common stock is $200 million, preferred stock is $300 million, and;debt is $500 million. Suppose that the cost of equity is 7%, the before-tax;cost of debt is 4.1%, cost of preferred stock is 3.4%, and the tax rate is 39%.;Compute the WACC.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 19;1. The common stock of ABC;Industries is valued at $34.8 a share. The company increases their dividend by;4.4 percent annually and expects their next dividend to be $2.79. What is the;required rate of return on this stock?;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;1 points;Question 20;1. The beta of the;risk-free asset is;0;1;1.5;2;1 points;Question 21;1. The spot rate for the;pound is ?0.6474 = $1 and the spot rate for the Canadian dollar is C$1.2231 =;$1. What is the ?/C$ cross rate?;Enter your answer rounded off to FOUR decimal;points. Do not enter any currency sign in the answer box.;1 points;Question 22;1. The principal amount of;a bond that is repaid at the end of term is called the par value or the;face value;coupon value;back-end value;call premium;perpetuity value;1 points;Question 23;1. You would like to create;a portfolio that is equally invested in a risk-free asset and two stocks. One;stock has a beta of 1.73. What does the beta of the second stock have to be if;you want the portfolio to have a beta of 0.99?;Enter your answer rounded off to two decimal;points.;1 points;Question 24;1. A bond that sells for less than;face value is called as;discount bond;debenture;par value bond;perpetuity;premium bond;1 points;Question 25;1. You are planning a trip;to London and plan on spending 15,056 pounds. How many dollars will this trip;cost you in dollars if one U.S. dollar is worth 0.5916 pounds.;Enter your answer rounded off to two decimal;points. Do not enter any currency sign in the answer box.;1 points;Question 26;1. If the coupon rate is;less than the yield to maturity, the bond will;sell at par;sell at a premium;sell at a discount;1 points;Question 27;1. An investor puts $25,000 in a;risk-free asset and $50,000 in the market portfolio. Compute the beta of his;portfolio.;0.50;1;0.33;0.67;2;1 points;Question 28;1. ABC, Inc. has 6 percent;bonds outstanding that mature in 20 years. The bonds pay interest semiannually;and have a face value of $1,000. Currently, the bonds are selling for $814;each. What is the firm's after-tax cost of debt if the tax rate is 36%?;Enter your answer as a percentage rounded off to;two decimal points.;1 points

Paper#49559 | Written in 18-Jul-2015

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