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What was the purchase price

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Reference no: EM132785693

Questions -

A) Assume that the Zinc Company is expected to pay dividends of $8 per share into the indefinite future and has a required rate of return of 10%. Find the fair value of Zinc Company's shares using the dividend discount model.

A. $110

B. $100

C. $80

D. $60

B) Which one of the following is not a benefit of a well-run stock exchange?

A. Shares are always priced at a level which accurately predicts the fortunes of the companies

B. Firms are able to find funds from investors and grow

C. Shareholders benefit from the availability of a speedy, cheap secondary market if they wish to sell

D. Society is assisted in the allocation of capital resources to productive use

C) An investor buys a bond face value 100 pounds with a coupon of 5.5% and three years to maturity. The market rate for this type of security is 4%. What was the purchase price?

A. 105.6053

B. 104.1627

C. 99.2732

D. 100.1984

D) The risk free rate is 1%, the expected return on the equity market is 6% and a share has a Beta of 1.2. What is the company's cost of equity?

A. 8.2%

B. 7.2%

C. 5.6%

D. 7.0%

E) Jason is considering investing for the very first time, and has had no training in finance or investing. Jason is very risk averse. Which of the following investments would be expected to have the lowest level of risk?

A. Bitcoin

B. Equity Investment Trust

C. AAA rated corporate bond

D. A fund investing in Venture Capital

F) Which of the following bonds would have a price that was most sensitive to a change in interest rates

A. Long maturity, low coupon bond

B. Short maturity, low coupon bond

C. Short maturity, high coupon bond

D. Short maturity, zero coupon bond

G) Company BBB offers face value 100 pounds, coupon rate 5% corporate bond. If the investor decides to invest this bond at the present bond value 112 pounds for 4 years, what is the yield to maturity of this investment?

A. 1.8%

B. 5%

C. 10.7%

D. 7.1%

H) Company X is expected to pay an end-of-year dividend of $5 a share. After the dividend its stock is expected to sell at $110. If the market capitalization rate is 8%, what is the current stock price?

A. $102

B. $106

C. $110

D. $128

I) Which one of the following is not a type of bond?

A. Municipal

B. Strip

C. Corporate

D. Covered

E. Foreign

F. Acceptance credit

J) Which of the following is NOT a reason for why the present value of a sum of money payable in 10 years' time is worth less than the same amount of money today?

A. Inflation

B. Tax Cuts

C. Liquidity

D. Risk

Reference no: EM132785693

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