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1. A stock will make its first dividend payment in 6 years. The dividend payment will be $4/share at that time. They will maintain a zero growth dividend policy, forever. R=15%. Calculate the stock price today.
2. Skolits Corp. issued 15-year bonds 2 years ago at a coupon rate of 8.8 percent. The bonds make semiannual payments. If these bonds currently sell for 109 percent of par value, what is the YTM? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
3. A stock will pay $3/share in year 1, $6/share in year 2, $9/share in year 3. Afterwards, they will change their dividend policy to constant growth at 2%/year, forever. R=13%. What is the stock price?
Graph the production opportunity set in a Co, C1 framework. -If the market rate of return is 10%, draw in the capital market line for the optimal investment decision.
The LIBOR zero curve is flat at 4% (continuously compounded) out to 2 years. Swap rates for 3- and 4-year annual pay swaps are 4.5% and 5%, respectively. Estimate the LIBOR zero rates for maturities of 3 and 4 years. Give your answers as annual rates..
What do you think were some of the issues people had with the bond rating agencies and were those issues reasonable?
Eight years ago, Over-the-Top Trampolines issued a 15-year bond with a $1,000 par value and 6% coupon rate. Today the going rate of interest on similar bonds is 6%. What is the bond's current value? If the market rate stays at 6% for the remainder of..
while the one-year interest rate on the U.S. dollar is 7%. You believe in the International Fisher effect.
Why letter of credit guarantees are an off- balance sheet item? How operational risk is related to technology risk? How technological expansion can help an FI better exploit economies of scale and economies of scope? When insolvency risk occurs? How ..
Sadik Inc.'s bonds currently sell for $1,270 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)?
Determine the net effect of this plan on the pretax profits of Bimbo. Assume there are 365 days per year.
what is the expected change in the value per share due to the recapitalization?
Budget Your Aunt Mary often runs into financial problems. Use the following information to calculate Aunt Mary’s budget surplus or deficit.
Describe the size, structure and composition of the mutual fund industry. Do you consider these characteristics as having a positive or negative impact on investors? Why?
the bond's market price has fallen to $917.30. The capital gains yield last year was -8.27%. What is the yield to maturity?
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