Question 1: Determine how much that you would be willing to pay for a bond that pays a semi-annual coupon and has the following characteristics: (a) Annual Coupon Rate 8%, Annual Yield to Maturity 9%, and Number of Years to Maturity 20.
Question 2: Determine the price that you would be willing to pay for a share of preferred stock that has the following characteristics: (a) Coupon--$7.00 and (b) Market Rate of Interest 5%.
Question 3: Determine the maximum price that you would be willing to pay for a 'no-growth' stock that has the following characteristics: (a) Investor's Required Rate of Return 10% and (b) Latest Dividend--$4.00.
Question 4: Determine the maximum price that you would be willing to pay for a 'constant-growth' stock that has the following characteristics: (a) Latest Dividend Payment--$3.50, (b) Growth Rate 5%, and (c) Investor's Required Rate of Return 11.5%.
Question 5: Determine the expected rate of return for a firm's common stock that has the following characteristics: (a) Market Rate of Interest 10%, (b) Risk Free Rate of Return 3%, and (c) Beta for Firm 1.45.
Question 6: Determine what the Beta is for a firm that has the following characteristics: (a) Expected Return on the Company's Stock is 13%, (b) Risk Free Rate of Return is 3%, and (c) The Market's Return is expected to be 10%.