mos has one share of stock and one bond. The total value of the two securities is $1,110.00.The bond has a YTM of 9.80 percent, a coupon rate of 8.75 percent, and a face value of $1,000.00; pays semi-annual coupons with the next one expected in 6 months; and matures in 7 years. The stock pays annu- ividends and the next dividend is expected to be $24.77 and paid in one year. The expected return for the stock is 15.68 percent. What is the price of the tock expected to be in 1 year? O $569.87 (plus or minus 10 cents) O $137.75 (plus or minus 10 cents) O $162.98 (plus or minus 10 cents) O $187.75 (plus or minus 10 cents) O the answer cannot be obtained based on the given information

mos has one share of stock and one bond. The total value of the two securities is $1,110.00.The bond has a YTM of 9.80 percent, a coupon rate of 8.75 percent, and a face value of $1,000.00; pays semi-annual coupons with the next one expected in 6 months; and matures in 7 years. The stock pays annu- ividends and the next dividend is expected to be $24.77 and paid in one year. The expected return for the stock is 15.68 percent. What is the price of the tock expected to be in 1 year? O $569.87 (plus or minus 10 cents) O $137.75 (plus or minus 10 cents) O $162.98 (plus or minus 10 cents) O $187.75 (plus or minus 10 cents) O the answer cannot be obtained based on the given information

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

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Sara has one share of stock and one bond. The total value of the two securities is $1,123.21. The stock pays annual dividends. The next dividend is expected to be $14.95 and paid in one year. In two years, the dividend is expected to be $13.42 and the stock is expected to be priced at $299.76. The stock has an expected return of 13.82 percent per year. The bond has a coupon rate of 6.20 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond? O7.68% (plus or minus 4 bps) 3.79% (plus or minus 4 bps) O7.57% (plus or minus 4 bps) 8.35% (plus or minus 4 bps) the answer cannot be obtained based on the given information
The nominal rate of return is $1,000. % earned by an investor in a bond that was purchased for $904, has an annual coupon of 9%, and was sold at the end of the year for $1031? Assume the face value of the bond is
Footsteps Company has a bond outstanding with a coupon rate of 5.1 percent and annual payments. The bond currently sells for $1,016.53, matures in 15 years, and has a par value of $1,000. What is the YTM of the bond?
Skyscraper Inc. has 12-year bonds outstanding with a face value of $1,000 and a market price of $974. The bonds pay interest annually and have a yield to maturity of 4.03%. What is the coupon rate?
You purchased a 10-year, 5% annual-coupon bond with $1,000 par value. The yield to maturity at the time of purchase was 4%. You sold the bond after one year, right after receiving the first coupon payment. The bond's yield to maturity was 3.5% when you sold it. What is your holding period return on the bond? Enter your answer as a decimal, rounded to four decimal places.
Mr. Berti the finance manager of Giannini Corporation (GC) has complied the following information to estimate the company's WACC. The GC's noncallable bonds mature in 7 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $942.96. The bond pays coupon payment semi- annually. GC's stock sells for $20 per share, its last dividend was $1.00, and its growth rate is a constant 6 percent. The target capital structure consists of 35% debt and the balance is common equity. GC does not expect to issue any new shares. The GC's tax rate is 40%. What is GC's WACC?
Kessen Inc.'s bonds mature in 7 years, have a par value of $1,000, and make an annual coupon payment of $70. The market interest rate for the bonds is 8.5%. What is the bond's price?
You are considering three investments: Bond that is selling in the market at $1,200. The bond has a $1,000 parvalue, pays interest at 14 percent, and is scheduled to mature in 12 years.For bonds of this risk class, you believe that a 12 percent rate of returnshould be required. Preferred stock ($100 par value) that sells for $80 and pays an annualdividend of $12. Your required rate of return for this stock is 14 percent. Common stock ($35 par value) that recently apaid a $3 dividend. The firm’sreturn on equity is 12.3%. The firm’s earning per share was $5.50 and itpaid $3.20 in dividends per share. The stock is selling for $25, and you thinka reasonable required rate of return for the stock is 20 percent. Required: a. Calculate the value of each security based on your required rate ofreturn. b. Which investment(s) should you accept? Why?
Quiver Archery's bond currently is selling for $1,006; its value one year ago was $996. The bond has a $1,000 maturity value and a coupon rate equal to 7 percent, and it matures in eight years. Interest is paic annually. Compute (a) the current yield and capital gains yield Quiver's bondholders earned during the year and (b) the bond's yield to maturity today
Julie has one share of stock and one bond. The total value of the two securities is $1,102.14. The stock pays annual dividends. The next dividend is expected to be $15.15 and paid in one year. In two years, the dividend is expected to be $11.79 and the stock is expected to be priced at $254.84. The stock has an expected return of 11.19 percent per year. The bond has a coupon rate of 7.10 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond? 8.68% (plus or minus 4 bps) 8.51% (plus or minus 4 bps) 4.26% (plus or minus 4 bps) 9.25% (plus or minus 4 bps) the answer cannot be obtained based on the given information
The Petit Chef Co. has 10.8 percent coupon bonds on the market with eight years left to maturity. The bonds make annual payments and have a par value of $1,000. If the bonds currently sell for $1,129.70, what is the YTM?
Crane, Inc., has four-year bonds outstanding that pay a coupon rate of 7.00 percent and make coupon payments semiannually. If these bonds are currently selling at $919.89. What is the yield to maturity that an investor can expect to earn on these bonds? What is the effective annual yeild?

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