FINC 315 EXAM 2

Werden Drilling offers 5.5 percent coupon bonds with semiannual payments and a yield to maturity of 7 percent. The bonds mature in 10 years. What is the market price per bond if the face value is $1,000?

893.41 omnicalculator.com/finance/bond-price

Worthy Ware pays a constant dividend of $1.46 per share. The company announced today that it will continue to pay the dividend for another 2 years and then in Year 3 it will pay a final liquidating dividend of $15.25 per share. What is one share of this stock worth today at a required return of 18.5 percent?

Answer: $11.44 Stock value= D1/ (1+r) t+ D2/ (1+r) t+ D3/ (1+r) t = 1.46/1.185+ 1.46/1.1852+ 15.25/1.1853 = 1.2320+ 1.0397+ 9.1646= 11.44

Fazekas Companies is preparing to pay annual dividends of $1.48, $1.60, and $1.75 per share over the next three years, respectively. After that, the annual dividend will be $1.90 per share indefinitely. What is this stock worth to you per share if you require a return of 14.6 percent?

Answer: c.$12.32 Explanation: Price at the end of year 3 = 1.90/0.146 = 13.01 Present Price per share = (1.48/(1+0.146)^1) +(1.60/(1+0.146)^2) +((1.75+13.01)/(1+0.146)^3) Present Price per share = $12.32

A stock had annual returns of 7 percent, −28 percent, 13 percent, and 23 percent for the past four years. The arithmetic average of these returns is _____ percent while the geometric average return for the period is _____ percent.

Chapter 12 Excel Problem 4 Arithmetic and geometric returns! 3.75; 1.72

You own a portfolio that has $1,720 invested in Stock A and $3,470 invested in Stock B. The expected returns on these stocks are 13.7 percent and 8.0 percent, respectively. What is the expected return on the portfolio?

Chapter 13 Excel Problem 2 9.89%

You recently purchased a stock that is expected to earn 12 percent in a booming economy, 6.5 percent in a normal economy, and lose 1.5 percent in a recessionary economy. The probability of a booming economy is 14 percent while the probability of a normal economy is 65 percent. What is your expected rate of return on this stock?

Chapter 13 Excel Problem 4 5.59%

What is the expected return of an equally weighted portfolio comprised of the following three stocks?

Chapter 13 Excel Problem 6 (made it myself) 10.96%

If the economy is normal, the stock of Flores Corporation is expected to return 12 percent. If the economy falls into a recession, the stock's return is projected at a negative 3.5 percent. The probability of a normal economy is 76 percent. What is the standard deviation of the returns on this stock?

Chapter 13 Excel problem 4 6.62%

Nasafi Lumber paid an annual dividend of $1.37 per share yesterday. Today, the company announced that future dividends will be increasing by 3 percent annually. If you require a return of 14.6 percent, how much are you willing to pay to purchase one share of this stock today?

12.16 Chapter 8 Excel Problem 1

You are purchasing a 15-year, zero coupon bond. The yield to maturity is 6.85 percent and the face value is $1,000. What is the current market price? Assume semiannual compounding.

364.11 omnicalculator.com/finance/bond-price

The 30-year, 5.5 percent bonds issued by Modern Kitchens pay interest semiannually, mature in four years, and have a $1,000 face value. Currently, the bonds sell for $1,020.66. What is the yield to maturity?

4.92 https://dqydj.com/bond-yield-to-maturity-calculator/

Schwartz Imports just paid an annual dividend of $2.69 per share and is expected to increase that amount by 5.2 percent per year. If you are planning to buy 1,000 shares of this stock next year, how much should you expect to pay per share if the market rate of return for this type of security is 12.6 percent at the time of your purchase?

40.23 Chapter 8 Excel Problem 1, make sure to change year to 1

The ________ explains the relationship between the expected return on a security and the level of that security's systematic risk. capital asset pricing model time value of money equation unsystematic risk equation market performance equation expected risk formula

Capital asset pricing model

Suppose a stock had an initial price of $30 per share, paid a dividend of $5 per share during the year, and had an ending share price of $33.40. What was the capital gains yield?

Chapter 12 Excel Problem 2 11.33%

You own 850 shares of Bennett Trading stock valued at $53.15 per share. What is the dividend yield if your total annual dividend income is $1,256?

Chapter 12 Excel Problem 2 2.78%

A stock experienced returns of 5 percent, −17 percent, and 15 percent during the last three years. What is the standard deviation of the stock's returns for the three-year period?

Chapter 12 Excel Problem 3 Type percentages out, use =stdev(#,#,#) 16.37% stdev

A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield to maturity rises to 5.7 percent from the current rate of 5.5 percent?

Subtract 5.5 value from 5.7 value -1.79% omnicalculator.com/finance/bond-price

Vanessa purchased a stock one year ago and sold it today for $3.15 per share more than her purchase price. She received a total of $2.60 per share in dividends. Which one of the following statements is correct in relation to this investment? The dividend yield is expressed as a percentage of the par value. The capital gain would have been less had Vanessa not received the dividends. The total dollar return per share is $.55. The capital gains yield is positive. The dividend yield is greater than the capital gains yield.

The capital gains yield is positive.

Petropoulos Resorts common stock sells for $58.49 per share and pays an annual dividend that increases by 1.3 percent annually. The market rate of return on this stock is 12.6 percent. What is the amount of the last dividend paid?

https://www.chegg.com/homework-help/questions-and-answers/roy-s-welding-common-stock-sells-5849-share-pays-annual-dividend-increases-13-percent-annu-q40953416

Olivares, Incorporated, bonds mature in 17 years and have a coupon rate of 5.4 percent. If the market rate of interest increases, then the: coupon rate will also increase. current yield will decrease. yield to maturity will be less than the coupon rate. market price of the bond will decrease. coupon payment will increase.

market price of the bond will decrease.