a) The equity shares of Cyberdyne Plc have a beta value of 0.90. The risk-free rate of return is 5% and the market risk premium is 3%. Corporation tax is 19%. Calculate the required rate of return on the shares of Cyberdyne Plc and explain the impact of beta on the shares of the company. b) Outline five benefits/advantages that a Stock Exchange listing could offer a company. c) Calculate the Yield to Maturity (YTM) of a £100 nominal value irredeemable bond with a coupon rate of 7% and a market value of £105. d) A 10-year corporate bond has 6 years remaining until redemption. The par value is £100 and it pays a 4% coupon on an annual basis. The yield to maturity is 8%. Using the above information, calculate the market price of the bond.
a) The equity shares of Cyberdyne Plc have a beta value of 0.90. The risk-free
Calculate the required rate of return on the shares of Cyberdyne Plc and explain the impact of beta on the shares of the company.
b) Outline five benefits/advantages that a Stock Exchange listing could offer a company.
c) Calculate the Yield to Maturity (YTM) of a £100 nominal value irredeemable bond with a coupon rate of 7% and a market value of £105.
d) A 10-year corporate bond has 6 years remaining until redemption. The par value is £100 and it pays a 4% coupon on an annual basis. The yield to maturity is 8%.
Using the above information, calculate the market price of the bond.
Step by step
Solved in 5 steps with 3 images
