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1. Compute the price of a 6.25 percent coupon bond...

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1. Compute the price of a 6.25 percent coupon bond with 15 years left to maturity and a market interest rate of 5 percent. The bond was sold at a par value of $1000. Assuming the interest payments are semi-annual is this a discount or premium bond? 2. Target Corp (TGT) recently earned a profit of $3.57 earnings per share and has a P/E ratio of 17.3. The dividend has been growing at a 14 percent rate over the past few years. If this growth continues, what would be the stock price in five years if the P/E ratio remained unchanged? 3. Target Corp (TGT) recently earned a profit of $3.57 earnings per share and has a P/E ratio of 17.3. The dividend has been growing at a 14 percent rate over the past few years. If this growth continues, what would be the stock price in five years if the P/E ratio remained unchanged? 4. The Kitter Corporation, a tech firm, has a beta of 3.75. If the market return is expected to be 20 percent and the risk-free rate is 9.5 percent, what is the company's required return? 5. General Talc Mines has compiled the following data regarding the market value and cost of the specific sources of capital. Market price per share of common stock $50 Market value of long-term debt $980 per bond What is the weighted average cost of capital, WACC, ?? 6. Diversified investors should be concerned solely with nondiversifiable risk because it can create a portfolio of assets that will eliminate all, or virtually all, diversifiable risk. Is this statement true or not? If so why and if not why not. 7. Investors purchase a stock when they believe that it is undervalued and sell when they feel that it is overvalued. Is this statement true or not? If so why and if not why not. 8. Does the level of risk associated with a given cash flow positively affects its value?

 

Paper#7163 | Written in 18-Jul-2015

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