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Expected return on the market

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Q1) USING CAPM: A stock has an expected return of 3.5 percent, its beta is 1.17, and the risk-free rate is 5.5 percent. What must the expected return on the market be?

Q2) BOND PRICES: Staind, Inc., has 7.5 percent coupon bonds on the market that have 10 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 8.75 percent, what is the current bond price?

Q3) BOND PRICES: Grohl. Co. issued 11 year bonds a year ago ata coupon rate of 6.9 percent. The bonds make semi-annual payments. If the YTM on these bonds is 7.4 percent, what is the current bond price?

Q4) STOCK VALUES: The Jackson- Timberlake Wardrobe Co. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. If investors require an 11 percent return on The Jackson-Timberlake Wardrobe Co. stock, what is the current price ? what will the price be in three years? in 15 years?

Q5) STOCK VALUES: Metroplex Corporation will pay a $3.04 per share dividend next year. The company pledges to increase its dividend by 3.8 percent per year indefinitely. If you require an 11 percent return on your investment, how much will you pay for the company's stock today?

Reference no: EM133061722

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