User Account

All Pages

Bond and Stock valuation, Financial Management

Assignment Help:
2. Suppose a 12% coupon bond sells at par today; and three years from today, the required rate on the same bond is 8%. What is the coupon rate on the bond today and what will it be 3 years from today. What is the par value today and what will it be three years from today?
3. XYZ Corp. needs to raise funds to finance a plant expansion. Mgt. decided to issue 25-year zero coupon bonds to raise the money. The required rate of return is 5%. What will these bonds sell at issuance?
4. ABC Corp. has 6% coupon bonds on the market that have 8 years left to maturity. The bonds make annual payments. If the yield to maturity is 7%, what is the current bond price?
5. What happens to the price of a three-year bond with an 8% coupon when interest rates change from 8% to 6%? How much will it change from par?
6. GHI Corp. has bonds on the market making annual payments, with 15 years to maturity and selling for $1,103.78. At this price the bond’s current yield is 5.44%. What is the coupon rate for this bond?
7. Visit the https://noir.bloomberg.com/markets/rates/keyrates.html site. Write down the current prime rate, 15-year mortgage rate, the 3 month T-Bill rate and the 5-year T-Bond rate (for the USA). Are you surprised?
8. In a recent issue of The Wall Street Journal the following Treasury bond quote was published:
Rate Maturity Mo/Yr Bid Asked Change Ask yield
3 1/8 Apr 09 n 99:25 99:26 -2 3.24

What do these numbers mean?
9. Two years ago bonds were issued with 10 years until maturity, selling at par, and a 7% coupon. If interest rates for that grade of bond are currently 8.25%, what will be the market price of these bonds?







1. What would an investor pay for a stock, if his required rate of return is 12%, the stock next year’s dividend is $3/share, and the dividend is expected to grow at 4%?

2. Better Plastics is a mature manufacturing firm. The company just paid a $4 annual dividend, but management expects to reduce the payout by 3 percent per year, indefinitely. If you require a 12 percent return on this stock, what will you pay for a share today?

3. What should be the current price of a share of stock if a $5 dividend was just paid, the stock has a required return of 20%, and a constant dividend growth rate of 6%?

4. The stock price of Samuelson, Inc. is $71. Investors require a 15 percent rate of return on similar stocks. If the company plans to pay a dividend of $4.20 next year, what growth rate is expected for the company''s stock price?

5. The data you found for GHK Co.’s stock in the paper (an imaginary company).
YTD % change 12-week Stock Div Yld % PE Vol 100s Close Net change
Hi Lo
- 2.7 40.125 15.375 GHK 0.85 10 421 21.75 0.625

a. Fill in the table.
b. What is the company’s earnings/share?
c. What was the stock’s closing price the day before?
d. If 20 trading days have passed since the start of the year, what was the price of the stock on the first trading day?
6. You own 1,250 shares of stock X. You read in the newspaper that the dividend for the stock is 3.88.
a. What did you earn in dividends?
b. The closing price of a stock is 90.25 and the dividend is 3.50. What is the yield of the stock?
c. The closing price of the stock is $66.40 and the net earnings per share are $2.50. What is the stock’s P-E ratio?

8. What is the expected constant growth rate of dividends for a stock currently priced at $50, that just paid a dividend of $4, and has a required return of 6%?

Related Discussions:- Bond and Stock valuation

Find out wacc, Directions: Use the information below to calculate the WACC...

Directions: Use the information below to calculate the WACC and its components for Hawk Corp. WACC= (%CE)(cost of CE) + (%PE)(cost of PE) + (%D)(cost of D)(1-T)

Cash flow yield analysis, A cash-flow yield is the discount r...

A cash-flow yield is the discount rate that makes the price of a mortgage-backed or asset-backed security equal to the present value of its ca

Calculate the confidence interval of returns, Following are return expectat...

Following are return expectations on the S&P 500 index for the upcoming year with the corresponding probabilities: Expectation                                   Return

Derivatives, Derivatives - Financial instruments whose value varies with va...

Derivatives - Financial instruments whose value varies with value of an underlying asset (like a stock, BOND, commodity or currency) or index like interest rates. Financial instrum

Value index numbers, Value Index Numbers The value index number as desc...

Value Index Numbers The value index number as described earlier is a combination index which combines price and quantity changes. Because of the difficulties experienced in pri

When are the financial crises occurred, When are the financial crises occur...

When are the financial crises occurred? Financial crises arise where there is a large raise in asymmetric information into financial markets. Asymmetric information arises whil

What is risk mitigation and how it is monitored, Q. What is Risk mitigation...

Q. What is Risk mitigation and how it is monitored? 1. When managing risks, there are several risk strategy options to be considered. Risk may be avoided entirely, transferred

Compare potential liability of owners of proprietorships, Compare and contr...

Compare and contrast the potential liability of owners of proprietorships, partnerships (general partners), and corporations. The sole proprietor has infinite liability for mat

Explain pro forma financial statements and a cash budget, What is the diffe...

What is the difference between pro forma financial statements and a cash budget?  Explain why pro forma financial statements are not used to forecast cash needs. Pro forma

Defqa, Ask question #Minimum 100 words acceptedaqs #

Ask question #Minimum 100 words acceptedaqs #

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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