A risk-free, zero-coupon bond with a face value of $1,000 has 15 years to maturity. If the YTM is 5.8%, which of the following would be closest to the price this bond will trade at?
a. $721
b. $525
c. $686
d. $429
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A stock is expected to pay $1.25 per share every year indefinitely and the equity cost of capital for the company is 7.5%. What price would an investor be expected to pay per share ten years in the future?
a. $16.67
b. $25.01
c. $33.34
d. $41.68
A risk-free, zero-coupon bond with a face value of $1,000 has 15 years to maturity. If the YTM is 5.8%, which of the following would be closest to the price this bond will trade at?
| a. | $721 | |
| b. | $525 | |
| c. | $686 | |
| d. | $429 |
-
A stock is expected to pay $1.25 per share every year indefinitely and the equity cost of capital for the company is 7.5%. What price would an investor be expected to pay per share ten years in the future?
a. $16.67
b. $25.01
c. $33.34
d. $41.68
Related questions
Part A
An investor just purchased a 10-year, $1,000 par value bond. The coupon rate on this bond is 8 percent annually, with interest being paid every 6 months. If the investor expects to earn a 10 percent simple rate of return on this bond, how much should she pay for it? (Round the answer to two decimal places.)
Part B
Assume that an investor wishes to purchase a 20-year bond with a maturity value of $1,000 and semiannual interest payments of $40. If the investor requires a 10 percent simple yield to maturity on this investment, what is the maximum price she should be willing to pay for the bond? (Round the answer to the nearest whole number.)
A 619
B 902
C 828
D 674
Tony's Pizzeria plans to issue bonds with a par value of $1,000 and 10 years to maturity. These bonds will pay $45 interest every 6 months. Current market conditions are such that the bonds will be sold at net $937.79. What is the yield to maturity (YTM) of the issue as a broker would quote it to an investor? (Round the answer to the nearest whole number.)
| 9% | ||
| 10% | ||
| 11% | ||
| 7% |
The last dividend on Spirex Corporation's common stock was $4.00, and the expected growth rate is 10 percent. If you require a rate of return of 20 percent, what is the highest price you should be willing to pay for this stock?
| $44.00 | ||
| $38.50 | ||
| $50.00 | ||
| $45.69 |
