Question1: The Chestnut Company has a level-coupon bond outstanding (face value = $1,000) that pays $120 per year and has 10 years to maturity. If the yield for similar bonds is currently 14%, calculate the bond's value?
Question2: You earned a total return of 8 percent on Stock A this year, earned 7% last year, and earned 15 percent two years ago. Compute both the three-year holding period return and the average three year return.
Question3: Compute the expected return on the stock of Mitro Corporation. The beta is estimated to be 1.4, the market risk premium is 9% and the risk-free rate is 4 percent.
Question4: Conlin Containers announces that on June 1, 1998, it will pay a dividend of $3.00 per share on July 15 to all holders on record as of June 30. The firm's stock price is currently at 50 dollar per share. Assume that all investors are in the 28 percent tax bracket. Given that the ex-dividend date is June 26, what should happen to Conlin's stock price on June 26?
Question5: A portfolio exists containing stocks A, B, and C held in proportions 50%, 30%, and 20% respectively. The expected returns on the three stocks are given by 10%, 15%, and 16% respectively. Compute the portfolio's expected return.
Question6: A project has a cost of 180 dollar. It will have a life of three years. The cost will be depreciated straight-line to a zero salvage value, and will be worth $40 at that time. Cash sales will be 200 dollar per year and cash costs will run $110 per year. The firm will also need to invest 70 dollar in net working capital at year 0. The appropriate discount rate is 8% [use for all flows], and the corporate tax rate is 40%. Calculate the cash flows in years 1, 2, & 3?