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Question;Question 1If the coupon rate is less than the yield to maturity, the bond will:Answer sell at a premiumsell at parsell at a discount.1 pointsQuestion 2ABC Inc. issued sixteen-year, 6 percent semi-annual coupon bonds at par. Today, the bonds are priced at $1012. What is the firm?s after-tax cost of debt if the tax rate is 30%?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.Answer.1 pointsQuestion 3An investor puts $20,000 in a risk-free asset and $40,000 in the market portfolio. Compute the beta of his portfolio.Answer 0.330.67210.50.1 pointsQuestion 4ABC 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.Answer.1 pointsQuestion 5If you receive $1,746 at the end of each year for the first three years and $8,525 at the end of each year for the next three years. What is the net present value of this cash flow stream? Assume interest rate is 13.9%.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.Answer.1 pointsQuestion 6You 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. Compute your investment in Stock C (i.e. solve for weight of Stock C)?Stock Weights BetaA 17 1.3B 29 0.5C? 1.8Rf??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.Answer.1 pointsQuestion 7What is the future value of $203 at 9% after 12 years?Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.Answer.1 pointsQuestion 8Suppose that today's stock price is $36.5. If the required rate on equity is 18.7% and the growth rate is 5.2%, 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.Answer.1 pointsQuestion 9The ABC Co. has $1,000 face value stock outstanding with a market price of $1,081. The stock pays interest annually, matures in 18 years, and has a yield to maturity of 8.5 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.Answer.1 pointsQuestion 10The nominal rate is 16% compounded monthly. Compute the effective rate.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.Answer.1 pointsQuestion 11You have observed the following returns on ABC's stocks over the last six years:3.1%, 6.2%, 13.5%, -6.3%, 11.9%, -7.7%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.Answer.1 pointsQuestion 12You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. One stock has a beta of 1.93. What does the beta of the second stock have to be if you want the portfolio to have a beta of 0.61?Enter your answer rounded off to two decimal points.Answer.1 pointsQuestion 13Suppose a stock had an initial price of $16.3 per share, paid a dividend of $2.4 per share during the year, and had an ending share price of $20.9. What are the percentage returns if you own 22 shares?Note: Enter your answer in percentages 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.Answer.1 pointsQuestion 14The beta of the risk-free asset is:Answer 011.52

Paper#50998 | Written in 18-Jul-2015

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