Jones Corp’s outstanding bonds, which have a face value of $1,000, have 10 years remaining to maturity. The bonds’ coupon rate is 6%, and interest is paid semiannually. If investors require a rate of return equal to 5% to invest in similar-risk bonds..
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A 15-year bond with a face value of $1,000 currently sells for $800. One year later, if the discount rate is still the same, The bond’s price will still be exactly $800. The bond’s price will still be somewhat greater (perhaps by around $10 more). Th..
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A company just paid out an annual dividend of $2. If the annual dividend is maintained at the same level for the next 5 years, and grows at 5% annually thereafter, what should be the price of a share today? Assume that the required rate of return for..
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Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has five years to maturity, whereas Bond Dave has 20 years to maturity. If interest rates suddenly rise by 2 percent, what is the perc..
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Stock X has an expected return of 0.11. It has a beta estimated at 1, a risk-free rate of 0.03 and a risk premium of 6.1. Its variance of returns is 0.0209. All returns here are expressed as decimals, not percentages. What is its coefficient of varia..
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Last year the selling corporation had earnings before interest and taxes (operating income) equal to $1 million. it paid $200,000 in dividends to its stockholders and $100,000 in interest to its creditors. During the year, the company also repaid a b..
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You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –12 percent, 21 percent, 27 percent, 6 percent, and 17 percent. What was the arithmetic average return on the stock over this five-year period? What was ..
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You buy a share of The Ludwig Corporation stock for $23.30. You expect it to pay dividends of $1.09, $1.15, and $1.2133 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $28.95 at the end of 3 years. calculate the growth rat..
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Smith Technologies is expected to generate $50 million in free cash flow next year, and FCF is expected to grow at a constant rate of 6% per year indefinitely. Smith has no debt or preferred stock, and its WACC is 15%. If Smith has 40 million shares ..
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Calculate the Holding Period Return: You invested to one of investment $45 per year last year. This year is worth $54 per share. Company also pays dividend $15 per share. What is the total return over the past year.
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Jiminy Cricket Removal has a profit margin of 9 percent, total asset turnover of 1.07, and ROE of 14.39 percent. What is this firm’s debt-equity ratio?
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Wells Fargo offers to lend you $50,000 at a nominal rate of 6.0%, simple interest, with interest paid quarterly. An offer to lend you the $50,000 also comes from Citibank, but it will charge 6.0%, simple interest, with interest paid at the end of the..
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