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Find the bond investment value of this issue, given that comparable non-convertible bonds are currently selling to yield 9%.
Explain the concept of conversion parity, and then find the conversion parity of this issue, given that the preference share trades at $90.
List several different types of bonds that you would recommend for their portfolio, and briefly indicate why you would recommend each.
Briefly explain what will happen to a bond's duration measure market interest rates go from 8% to 9%.
What kind of investment strategies would you recommend if your client were a very conservative investor who could not tolerate market losses?
Assuming that you put an equal amount of money into each of the six bonds you selected, find the duration for this six-bond portfolio.
How does the justified price you computed compare to the latest market price of the share?
If you had to choose just one procedure to use in practice, which would it be? Explain.
Assume throughout that the current dividend (D0) remains the same and that all other variables in the model are unchanged.
An investor estimates that next year's sales for New World Products should amount to about $75 million.
Goodstuff Corporation has total equity of $500 million and 100 million shares outstanding. Its ROE is 15%. Calculate the company's EPS.
HighTeck has an ROE of 15%. Its earnings per share are $2.00, and its dividends per share are $0.20. Estimate HighTeck's growth rate.
What is the intrinsic worth of this share, given a 10% required rate of return?
Using the dividend valuation model, find the intrinsic value of the company's shares.
Given that dividends are expected to grow indefinitely at 8%, use a 15% required rate of return and the dividend valuation model to find the value of the share.
It trades at a P/E ratio of 18 times earnings and has a beta of 1.15. In addition, you plan on using a risk-free rate of 7% in the CAPM, along with a market.
Use the variable-growth DVM and a required rate of return of 12% to find the maximum price you should be willing to pay for this share.
It is expected to pay dividends of $2 per share in each of the next five years and to generate an EPS of $5 in year 5.
The share always trades at a P/E ratio of 15 times earnings, and the investor has a required rate of return of 20%.
Assume a major investment service has just given Oasis Electronics its highest investment rating, along with a strong buy recommendation.
The company is expected to have a dividend payout ratio of 40% and to maintain a return on equity of 20%.
The capital structure for the firm will be maintained and is now 10% preferred stock, 30% debt, and 60% new common stock.
If expenses could be reduced by $144,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and rate of return.
He has a large amount tied up in Treasury notes paying 3%. He is considering moving some of his funds from the T-notes into shares.
Assume you wish to evaluate the risk and return behaviours associated with various combinations of assets V and W under three assumed degrees of correlation.