Exam 1 Review
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School
Clovis Commuity College *
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Course
MISC
Subject
Finance
Date
Apr 3, 2024
Type
xlsx
Pages
20
Uploaded by juliamprice
Coupon Rate:
6.00%
Years:
5
YTC:
5.25%
Par:
$1,000 Call Price:
$1,120 NPER:
10
PMT:
$30.00 Rate:
2.63%
PV (Price):
$1,125.00 current yield 5.33%
1. What is the current yield and the yield to call on a bond with a coupon rate of 6% paid semi-annuall
par value of $1,000 and a selling price of $1,125, callable after 5 years with 2 years' interest as a the ca
ly, 5 years to maturity, a all premium?
Shares 100
Price $30.00
Interest $ 45.00 Div $0.30
Margin 70%
Amount invesed
$2,100.00
Sold For $34.00
Total return $385.00
ROI
18.33%
Borrowed amount $ 900.00 Interest 5.00%
2. Gerry bought 100 shares of stock for $30.00 per share on 70% margin. Assume Gerry hold
his interest costs will be $45 over the holding period. Gerry also received dividends amounti
a. What is the interest rate on the margin borrowed?
b. Ignoring commissions, what is his percentage return on invested capital if he sells the stoc
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ds the stock for one year and that ting to $0.30 per share. ck for $34 a share?
Stock Price
22
Dividend
1.75
Sell Price
28
HPR
67.05%
HPR Annualized
13.41%
3. If an investor buys a stock for $22, collects a dividend of $1.75 each year for 5 years, and sell
the end of the 5th year,
a. what is the holding period return, and b. what is the HPR annualized?
ls the stock for $28 at
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Coupon Rate:
0.00%
Years:
10
YTM:
7.50%
Par (FV):
$1,000 NPER:
10
PMT:
$0.00 Rate:
7.500%
PV (Price):
($485.19)
4. Nathan bought a zero coupon bond in 2010 for $485.19. In 2020 he redeemed it for $
return on this bond?
$1,000. What was his rate of
Div 1
$ 0.50 Div Increase
4%
Beta
1.6
Market Return
8%
T-Bill
3%
Price
$ 6.98 Price
$ 7.14 5. WaterCo is a manufacturer of boat parts and has been in business only a few years. Its
start paying a dividend to help boost the attractiveness of its stock. The dividend will be $
that dividends will increase by 4 percent per year. The company has a beta of 1.6. The ma
T-bill rate is 3%. Should you purchase shares in this firm at the current market price of $6.
estimated stock value?)
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s board of directors decided to $0.50 per share next year. After arket rate of return is 8% and the .98 per share? (What is your
Settlement Date
3/20/2024
Maturity Date
3/20/2028
Coupon Rate
7.00%
Yield to Maturity
6.00%
Coupons per year
1
Duration
3.6313
Modified Duration
3.43
6. A $1,000 par value, 7% annual coupon bond matures in 4 years. The bond is currently pr
YTM of 6.0%. What is the Macaulay duration and the modified duration of the bond?
riced at $1,034.65 and has a
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year
dividend 2019
$ 1.00 2020
$ 1.25 2021
$ 1.50 EPS
$ 4.50 P/E ratio
20 RRR
12%
Rs = 12%
G4+ =
Year
PV
D0 = 1
($0.89)
<---
D1 = $ 1.00 2
($1.00)
<---
D2 = $ 1.25 3
($1.07)
<---
D3 = $ 1.50 P0
($64.06)
<---
P3 = $90.00
Price = ($67.02)
7. Early in 2019, Mathew is analyzing shares of Janeff Corp. He expects the following dividen
He expects 2021 earnings per share to be $4.50 and Janeff's P/E ratio to be 20. His required
is 12%. What is his valuation (today) of Janeff Corp stock?
nds per share (end of year). d rate of return for this stock
selling price
$132 # of shares sold
300
proceeds from sale
$39,600 buying price
$140 # of shares bought
300
price for stock
$42,000 dollar return
($2,400)
ROI
-6.06%
8. Kensington Company stock was selling at $132 a share when Charlotte sold 300 shares
Charlotte bought 300 shares of the same stock at a price of $140 per share to cover her p
costs, what is the dollar return and percent return on Charlotte's investment?
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s of the stock short. Today position. Ignoring trading
purchase price
$22.50 # of shares
100
initial margin
70%
maintenance margin
30%
amt borrowed per share
$6.75 call price
$9.64 9. Justin just made a margin purchase of 100 shares of DEF Corp. for $22.50 per share. The margin is 30%. How low can the price of each share of DEF be before Justin would receive a
initial margin is 70%. The maintenance a margin call?
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net income
$ 5,000,000 depreciation
$ 1,200,000 working cap investment $ (250,000)
fixing assets cost $ (575,000)
FCF last year
$ 5,375,000 growth rate
4%
rrr
11.50%
future FCF
$74,533,333.33 # of shares os
4,200,000 per-share value of cs
$ 17.75 10.Davis Company earned $5 million in net income last year, with depreciation deduc
working capital of $250,000 and the cost of fixed assets were $575,000. The company
forever and investors require an 11.5% return on Davis stock. Also, Davis has 4.2 milli
What is the per-share value of the company's common stock?
ctions of $1,200,000 and made new investments in y's free cash flow is expected to grow at 4% per year ion shares of common stock outstanding.
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zero rate
100
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4.0405%
100
1
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find the par-yield for the 2-year-maturity bond
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