Required yield to maturity on a comparable-risk

Assignment Help Business Economics
Reference no: EM131757042

1. (Bond valuation) Calculate the value of a bond that matures in 10 years and has a $1,000 par value. The annual coupon interest rate is 9 percent and the market's required yield to maturity on a comparable-risk bond is 15 percent. What would be the value of this bond if it paid interest semiannually?

2. (Yield to maturity) Settles Co.'s bonds mature in 15 years and pay 8 percent interest annually. If you purchase the bonds for $1,175, what is their yield to maturity?

3. (Common stock valuation) Foster Motor, Inc., paid a $3.75 dividend last year. If Foster's return on equity is 24 percent, and its retention rate is 25 percent, what is the value of the common stock if the investors require a 20 percent rate of return?

4. (Common stock valuation) Redford, Inc.'s outstanding common stock is currently selling in the market for $33. Dividends of $2.30 per share were paid last year, return on equity is 20 percent, and its retention rate is 25 percent.

  • What is the value of the stock to you, given a 15 percent required rate of return?
  • Should you purchase this stock?

Reference no: EM131757042

Questions Cloud

How much can the firm increase its inventory : Which will be financed using short-term debt. How much can the firm increase its inventory without its current ratio falling below 2.1
What are the unintended consequences of technology on nature : How is technology intended to affect nature? What are the unintended consequences of technology on nature? What is the role of the zombie in this critique?
Protecting health and the environment : 4. Select one bullet point from your chosen column 5. Write a one-page paper highlighting the main points discussed - Write a one-page paper highlighting
Calculate the value of the test statistic : If a simple random sample of 75 Ohio drivers contained 10 drivers who did NOT have motor vehicle insurance, then calculate the value of the test statistic
Required yield to maturity on a comparable-risk : The annual coupon interest rate is 9 percent and the market's required yield to maturity on a comparable-risk bond is 15 percent.
Discuss accurately and effectively communicate ideas : Discuss Accurately and effectively communicate ideas, information, arguments, and messages to present material in a historical context.
Explain the field of psychology in the workplace : Try to choose a psychology of the workplace related topic you are genuinely interested in. Your paper must address recent empirical evidence.
Describe the theoretical foundation for each study : Describe examples of events or situations where you changed your language in response to a situation or people with whom you were speaking.
Discuss american involvement in the cold war : Discuss American involvement in the Cold War. What role did the WWII play in bringing about the conflict? What were some of the major conflicts that took place?

Reviews

Write a Review

Business Economics Questions & Answers

  Which firms in the mutual fund industry

What additional benefits are possible for people in the private system and why? Which firms in the mutual fund industry might not be approved by the federal government and why?

  Charge in order to maximize her total revenue

Mia is the only seller of baskets to the people in this village. They purchase baskets according to the blue demand curve. Let's examine the sales revenue (which equals price times quantity) Mia would receive if she were to set the price somewhere in..

  Describe in words how to interpret the coefficient

Annual Work Hours = ? + ?*(Average Hourly Wage) + ? You gather data on US workers aged 22 to 55 from the Current Population Survey. You define the Average Hourly Wage as self-reported total annual labor income divided by self-reported total annual wo..

  Reserves to raise the federal funds rate

For Econ 470 question: In December 2008, the federal funds rate hit the zero lower bound, where it remained until December 2015.How could the Fed have used the interest on reserves to raise the federal funds rate?

  What is the purpose of economic sanctions

What is the purpose of economic sanctions? What problems do they pose for the nation initiating the sanctions? When are sanctions most successful in achieving their goals?

  The board of governors of the federal reserve system

The Board of Governors of the Federal Reserve System:

  Important benefits of automobile insurance

Justin, a sixteen (16) year old, has purchased his first vehicle-a bright-red sports car. Assuming that he took a defensive driving course at his local school

  Previously mentioned transactions

In 2013, the furniture store PB produced 13 mahogany desks. One of them is sold to Jeanine for $3,349, later that same year Jeanine sold the desk to Pamela for $1,919. The remaining desks were not sold to anyone that year and stay in PB's inventory a..

  How many trips versus dinners out you could purchase

Consider we wanted to know how many trips versus dinners out you could purchase. If you were told that X = number of trips and Y = the number of dinners out and you were given the following budget information;  What is the meaning of the slope of the..

  Monthly demand and supply curves in the market for teapots

The following graph shows the monthly demand and supply curves in the market for teapots.

  What is the socially efficient amount of plowing

Suppose that Scott and Bob live on the same street. In the winter, both of them like the snow on their street to be plowed. Bob’s demand is given by Q = 40 – P, and Scott’s demand is given by Q = 30 – 2P. Suppose that the marginal cost of plowing the..

  Demand-supply of health insurance market

The ACA imposed a penalty on uninsured. Does it really promote more uninsured young adults to purchase health insurance? What is its impact on demand/supply of health insurance market?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd