Questions based on bond valuation and dps

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Reference no: EM1315657

Multiple choice questions on Bond Valuation and DPS.

1. The U.S. Treasury offers to sell you a bond for $613.81. No payments will be made until the bond matures 10 years from now, at which it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?

a. 5.91%

b. 6.71%

c. 7.10%

d. 5.59%

e. 5.00%

2. Temple square Inc. reported that its retained earnings for 2005 were $490,000. In its 2006 financial statements, it reported $60,000 of net income, and it ended 2006 with $510,000 of retained earnings. How much were paid as dividends to shareholders during 2006?

a. $20,000

b. $25,000

c. $30,000

d. $35,000

e. $40,000

3. Collins Inc's latest net income was $1 million, and it had 200,000 shares outstanding. The company wants to pay out 40% of its income. What dividend per share should the company declare?

a. $1.60

b. $1.70

c. $1.80

d. $1.90

e. $2.00

Reference no: EM1315657

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