4) A four-year bond has an 8 percent coupon rate and a face value of $1,000. If the current price of the bond is $878.31, calculate the yield to maturity of the bond (assuming annual interest payments). A) 8 percent B) 10 percent C) 12 percent D) 6 percent
4) A four-year bond has an 8 percent coupon rate and a face value of $1,000. If the current price of the bond is $878.31, calculate the yield to maturity of the bond (assuming annual interest payments). A) 8 percent B) 10 percent C) 12 percent D) 6 percent
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
4
![1) The firm's purchase of real assets is also referred to as the:
A) capital structure decision.
B) CFO decision.
C) financing decision.
D) capital investment decision.
2) A Wall Street Journal quotation for a company has the following values: Div: $1.12, PE:
18.3, Close: $37.22. Calculate the approximate dividend payout ratio for the company.
A) 18 percent
B) 35 percent
C) 45 percent
D) 55 percent
3) The ultimate financial goal of a corporation is to:
A) minimize stockholder risk.
B) maximize profit.
C) maximize the value of the corporation to the stockholders.
D) increase size of the firm.
4) A four-year bond has an 8 percent coupon rate and a face value of $1,000. If the current
price of the bond is $878.31, calculate the yield to maturity of the bond (assuming annual
interest payments).
A) 8 percent
B) 10 percent
C) 12 percent
D) 6 percent
5) A project requires an investment of $900 today. It can generate sales of $1,100 per year
forever. Costs are $600 for the first year and will increase by 20 percent per year. (Assume all
sales and costs occur at year-end [i.e., costs are $600 @ t= 1].) The project can be terminated
at any time without cost. Ignore taxes and calculate the NPV of the project at a 12 percent
discount rate.
A) $65.00
B) $57.51
C) $100.00
D) It cannot be calculated as g>r.
6) World-Tour Co. has just now paid a dividend of $2.83 per share (Divo); its dividends ar
expected to grow at a constant rate of 6 percent per year forever. If the required rate of retur
on the stock is 16 percent, what is the current value of the stock, after paying the dividend?
A) $70
B) $56
C) $30](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbc61a5d7-7e46-42e0-9d49-1ea61d0fa8b1%2Fd57d0397-0f60-4eb0-b130-4731ac118a0f%2Fs3hnttj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1) The firm's purchase of real assets is also referred to as the:
A) capital structure decision.
B) CFO decision.
C) financing decision.
D) capital investment decision.
2) A Wall Street Journal quotation for a company has the following values: Div: $1.12, PE:
18.3, Close: $37.22. Calculate the approximate dividend payout ratio for the company.
A) 18 percent
B) 35 percent
C) 45 percent
D) 55 percent
3) The ultimate financial goal of a corporation is to:
A) minimize stockholder risk.
B) maximize profit.
C) maximize the value of the corporation to the stockholders.
D) increase size of the firm.
4) A four-year bond has an 8 percent coupon rate and a face value of $1,000. If the current
price of the bond is $878.31, calculate the yield to maturity of the bond (assuming annual
interest payments).
A) 8 percent
B) 10 percent
C) 12 percent
D) 6 percent
5) A project requires an investment of $900 today. It can generate sales of $1,100 per year
forever. Costs are $600 for the first year and will increase by 20 percent per year. (Assume all
sales and costs occur at year-end [i.e., costs are $600 @ t= 1].) The project can be terminated
at any time without cost. Ignore taxes and calculate the NPV of the project at a 12 percent
discount rate.
A) $65.00
B) $57.51
C) $100.00
D) It cannot be calculated as g>r.
6) World-Tour Co. has just now paid a dividend of $2.83 per share (Divo); its dividends ar
expected to grow at a constant rate of 6 percent per year forever. If the required rate of retur
on the stock is 16 percent, what is the current value of the stock, after paying the dividend?
A) $70
B) $56
C) $30
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