Company OMEGA wants to invest in Bonds and Stocks. The finaocial manager was looking at different types of Bonds and Stocks. After studying the market, he decided to choose 3 bonds and 3 stocks. Grven the following information Bonds: The financial manager wants to buy bonds A. B, Cand he decided to buy different mumbers from each bood. All bonds pay annual coupon Bood Number of Boods Type YIM Coupon rate 5.5% Maturity 12 years 13 years Face Value A 25 Discount Bond 3000 1000 8.6% B 17 Par Bond 29 Premium Bond 18 years 10.2% 5.26 3000 Stocks: The financial manager wants to buy Stocks X. Y, Z and be decided to buy different numbers from each stock Par Bona 13 years TU00 29 Premium Bond 10.2% 5.2% 18 years 3000 Stocks: The financial manager wants to buy Stocks X. Y, Z and he decided to buy different numbers from each stock Stock Dividends Type Required Return Dividends I Number of Stock 2300 Growth Dividends 0 Zero Growth 10% 3.8 1900 15% 4% 1.8 Constant Growth 2100 Con 14% 3% Growth Calculate the total amount of investment the company needs to buy the 3 bonds and the 3 stocks.

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
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Company OMEGA wants to invest in Bonds and Stocks. The financial manager was looking at different
types of Bonds and Stocks. After studying the market, he decided to choose 3 bonds and 3 stocks. Given the
following information
Bonds: The financial manager wants to buy bonds A, B, C and he decided to buy different mumbers from
each bond. All bonds pay annual coupon
Bond
Number of Bonds
Туре
Discount Bond
Coupon rate
YTM
Maturity
12 years
13 years
Face Value
25
5.5%
8.6%
3000
B
17
Par Bond
1000
29
Premium Bond
18 years
10.2%
5.26
3000
Stocks: The financial manager wants to buy Stocks X, Y, Z and be decided to buy different numbers from
each stock.
15 уears
TUOU
Par Bond
29
Premium Bond
10.29%
5.2%
18 years
3000
Stocks: The financial manager wants to buy Stocks X, Y, Z and he decided to buy different numbers from
each stock.
Stock
Dividends Type
Required
Growth
Dividends 0
Dividends I
Number of
Stock
Returm
2300
Zero Growth
10%
3.8
Y
1900
Constant
15%
4%
1.8
Growth
2100
Constant
14%
3%
Growth
Calculate the total amount of investment the company needs to buy the 3 bonds
and the 3 stocks.
Transcribed Image Text:Company OMEGA wants to invest in Bonds and Stocks. The financial manager was looking at different types of Bonds and Stocks. After studying the market, he decided to choose 3 bonds and 3 stocks. Given the following information Bonds: The financial manager wants to buy bonds A, B, C and he decided to buy different mumbers from each bond. All bonds pay annual coupon Bond Number of Bonds Туре Discount Bond Coupon rate YTM Maturity 12 years 13 years Face Value 25 5.5% 8.6% 3000 B 17 Par Bond 1000 29 Premium Bond 18 years 10.2% 5.26 3000 Stocks: The financial manager wants to buy Stocks X, Y, Z and be decided to buy different numbers from each stock. 15 уears TUOU Par Bond 29 Premium Bond 10.29% 5.2% 18 years 3000 Stocks: The financial manager wants to buy Stocks X, Y, Z and he decided to buy different numbers from each stock. Stock Dividends Type Required Growth Dividends 0 Dividends I Number of Stock Returm 2300 Zero Growth 10% 3.8 Y 1900 Constant 15% 4% 1.8 Growth 2100 Constant 14% 3% Growth Calculate the total amount of investment the company needs to buy the 3 bonds and the 3 stocks.
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