Author: Anonymous

A bond with a face value of $1,000 matures in 25 years and has a 9.4 percent semiannual coupon.  (That is, the bond pays a $47.00 coupon every six months.)   The bond has a nominal yield to maturity of 9.3 percent, and it can be called in 3 years at a call price of $1,088.00.  What is the bond’s nominal yield to call?

The Jones Company has decided to undertake a large project. Consequently, there is a  need for additional funds.  The financial manager plans to issue preferred stock with a  perpetual annual dividend of $2.7 per share and a par value of $78.  If the required return  on this stock is currently 9 percent, what should be the stock’s market value?

In a valid constant growth model, the required return is ___________ than the growth rate, and the growth rate is _____________. 

A corporate bond has a face value of $1,000, and pays a $14 coupon semiannually (that is, the bond has a 2.8 percent coupon).  The bond matures in 6 years and sells at a price of $545.  What is the bond’s nominal yield to maturity?

A 30-year bond has a 11 percent annual coupon, a yield to maturity of 6 percent, and a face value of $1,000.  What is the price of the bond?

A bond is likely to be called if

A share of preferred stock pays a semiannual dividend of $3.9.  If the price of this preferred  stock is currently $83, what is the nominal annual rate of return?

The Jones Company has decided to undertake a large project. Consequently, there is a  need for additional funds.  The financial manager plans to issue preferred stock with a  perpetual annual dividend of $7.6 per share and a par value of $37.  If the required return  on this stock is currently 4.3 percent, what should be the stock’s market value?

If you buy a bond today and hold it to maturity, there is no question that you will earn the _______________, assuming the bond issuer does not default and makes its interest and principal payments until the bond matures. 

Malko Enterprises’ bonds currently sell for $729.  They have a 7-year maturity,  an annual coupon of $118.3, and a par value of $1,000.  What is their current  yield?