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Finding yield to maturity of xyz corporation

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Reference no: EM132853822

1. XYZ Corporation's bonds have 14 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $950. What is their yield to maturity? Show your work.

Complete problem: Required Rate of Return

Show your work.

2. Suppose rRF = 5%, rM = 10%, and rA = 12%.

a. Calculate Stock A's beta.

b. If Stock A's beta were 2.0, then what would be A's new required rate of return?

3. Complete problem: Portfolio Beta

You have a $4 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.1. You are considering selling $100,000 worth of one stock with a beta of 0.9 and using the proceeds to purchase another stock with a beta of 1.4. What will the portfolio's new beta be after these transactions? Show your work.

Reference no: EM132853822

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