Multiple choice questions on Bond Valuation and DPS.
1. The U.S. Treasury offers to sell you a bond for $613.81. No payments will be made until the bond matures 10 years from now, at which it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?
a. 5.91%
b. 6.71%
c. 7.10%
d. 5.59%
e. 5.00%
2. Temple square Inc. reported that its retained earnings for 2005 were $490,000. In its 2006 financial statements, it reported $60,000 of net income, and it ended 2006 with $510,000 of retained earnings. How much were paid as dividends to shareholders during 2006?
a. $20,000
b. $25,000
c. $30,000
d. $35,000
e. $40,000
3. Collins Inc's latest net income was $1 million, and it had 200,000 shares outstanding. The company wants to pay out 40% of its income. What dividend per share should the company declare?
a. $1.60
b. $1.70
c. $1.80
d. $1.90
e. $2.00