The Wall Street Journal reports that the current rate on 10-year Treasury bonds is 8.15 percent, on 20-year Treasury bonds is 8.75 percent, and on a 20-year corporate bond issued by MHM Corp. is 10.55 percent. Assume that the maturity risk premium is zero.
If the default risk premium and liquidity risk premium on a 10-year corporate bond issued by MHM Corp. are the same as those on the 20-year corporate bond, calculate the current rate on MHM Corp.'s 10-year corporate bond. (Round your answer to 2 decimal places.)
A firm is expected to pay a dividend of $2.95 next year and $3.25 the following year. Financial analysts believe the stock will be at their price target of $115 in two years.
Compute the value of this stock with a required return of 13.2 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Your discount brokerage firm charges $8.60 per stock trade.
How much money do you need to buy 400 shares of Time Warner, Inc. (TWX), which trades at $33.62? (Round your answer to 2 decimal places.)