Finance questions..
1. Consider a bond with a price of $1,140.25, 10 years to maturity, $1,000 face value, pays quarterly coupons, and has a yield to maturity of 8.9%. What is the bond's coupon rate?
2. Suppose a stock's beta decreases and the market risk premium is positive. All else equal, what happens to i) the stock's required return and ii) its stock price?
3. A firm expects dividends to grow at 15% for the next two years and 5.1% thereafter. The firm just paid a dividend of $4.70 (i.e., D0 = 4.70) and the required rate of return is 20.5%. The stock should sell for $______.
4. Your firm has a current beta of 1.25. The expected return on the market is 10% and the risk-free rate is 4%. Your CEO is interested in lowering the company's cost of equity to 10% by purchasing another company that has a lower beta. If the company's current market capitalization is $3 billion and the CEO is considering buying another $2 billion company, what must the new company's beta be to achieve this goal?
5.Expected Return on Stock A: 10%
Expected Return on Stock B: 17%
Standard Deviation Stock A: 26%
Standard Deviation Stock B: 58%
Risk free rate: 4%
You want to create a portfolio that is 70% invested in Stock A and 30% invested in the risk-free asset. What is this portfolio's standard deviation?