PQR has one share of stock and one bond. The total value of the two securities is $1.100. The bond has a YTM of 16.20 percent, a coupon rate of 9.60 percent, and a face value of $1,000: pays semi-annual coupons with the next one expected in 6 months: and matures in 3 years. The stock pays annual dividends that are expected to grow by 4.82 percent per year forever. The next dividend is expected to be $12.40 and paid in one year. What is the expected return for the stock? a. 9.83% (plus or minus 0.03 percentage points) Ob.9.74% (plus or minus 0.03 percentage points) ec 492% (plus or minus 0.03 percentage points) Od. 5.01% (plus or minus 0.03 percentage points) Oe. None of the above is within 0.03 percentage points of the correct answer

PQR has one share of stock and one bond. The total value of the two securities is $1.100. The bond has a YTM of 16.20 percent, a coupon rate of 9.60 percent, and a face value of $1,000: pays semi-annual coupons with the next one expected in 6 months: and matures in 3 years. The stock pays annual dividends that are expected to grow by 4.82 percent per year forever. The next dividend is expected to be $12.40 and paid in one year. What is the expected return for the stock? a. 9.83% (plus or minus 0.03 percentage points) Ob.9.74% (plus or minus 0.03 percentage points) ec 492% (plus or minus 0.03 percentage points) Od. 5.01% (plus or minus 0.03 percentage points) Oe. None of the above is within 0.03 percentage points of the correct answer

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Footsteps Company has a bond outstanding with a coupon rate of 5.1 percent and annual payments. The bond currently sells for $1,016.53, matures in 15 years, and has a par value of $1,000. What is the YTM of the bond?
Frozen Food Bhd has issued a bond with par value of RM1,000, a coupon rate of 9 percent that is paid semi-annually, and that matures in 10 years. If an investor requires a 12 percent yield, calculate the value of the bond. Briefly describe the relationship between the interest rate and bond value. Iriz Bhd paid RM2.00 per share in common stock dividends last year. The company's policy is to allow its dividend to grow at 5 percent for 4 years and then the rate of growth changes to 3 percent per year from year five and on. Assume the required rate of return is 8 percent, calculate the value of the stock.
Skyscraper Inc. has 12-year bonds outstanding with a face value of $1,000 and a market price of $974. The bonds pay interest annually and have a yield to maturity of 4.03%. What is the coupon rate?
The Blindjammer Co. bonds are currently selling for $1,007.27. These bonds mature in four years, pay interest annually, and have a yield-to-maturity of 8.63%. What is the coupon rate?
YunJun, Inc. is contemplating to issue a 15-year convertible bond that would be priced at its $1,000 par value. The bonds would have a 9.00% annual coupon, and each bond could be converted into 25 shares of common stock. The required rate of return on an otherwise similar nonconvertible bond is 11.00%. The stock currently sells for $42.00 a share, has an expected dividend in the coming year of $2.10, and has an expected constant growth rate of 6.00%. What is the estimated floor price of the convertible at the end of Year 3?
The Petit Chef Co. has 10.8 percent coupon bonds on the market with eight years left to maturity. The bonds make annual payments and have a par value of $1,000. If the bonds currently sell for $1,129.70, what is the YTM?
Redesigned Computers has 5.25 percent coupon bonds outstanding with a current market price of $562.13. The yield to maturity is 16.28 percent and the face value is $1,000. Interest is paid semiannually. How many years is it until these bonds mature?
A). The par value of 25-year 11% bond of SRT Ltd is $4,000. The bond has a remaining life of 7 years and the coupon is paid semi-annually. The current market yield for a similar risky bond is 14.01%. What would be the expected market price for this bond? Round your answers to 2 decimal points. B). The market expects 11.8 percent returns from the ordinary shares of GRT Ltd, which has just declared a dividend of $4.61 per share. It is anticipated that the earnings and dividends of GRT Ltd share will grow at 18 percent for the next 4 years before settling down to a constant 6.3% growth rate. What price is expected for GRT share by the investors? Round your answer to 2 decimal points only at last step of calculation. C). A Limited's bonds bearing a coupon of 12%, pay coupons semi-annually, have three years remaining to maturity, and are currently priced at $940 per bond. What is the yield to maturity? Round your answer to 2 decimal points.
CEPS Group has a 11.5 percent coupon bond outstanding that matures in 8 years. The bond pays interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 11.78 percent compounded semiannually?
The nominal rate of return is $1,000. % earned by an investor in a bond that was purchased for $904, has an annual coupon of 9%, and was sold at the end of the year for $1031? Assume the face value of the bond is
CGJ Bicycles, Incorporated, is currently selling bonds with an annual coupon of 13 percent. The yield to maturity for these bonds is 6.68 percent and they will mature in 29 years. What should be the current market price of each bond if they each have a face value of $1,000? O$1,494.42 $1,801.05 O $1,805.38 $1.647.73 O $527.89
Volbeat Corporation has bonds on the market with 12.5 years to maturity, a YTM of 8 percent, and a current price of $980. The bond makes semiannual payments. What is the coupon rate?

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