Finance Assignment
A. Bond Pricing. A 30-year-maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 8%. What is the bond's yield to maturity if the bond is selling for:
i. $900?
ii. $1,000?
iii. $1,100?
B. Bond Pricing. The following table shows some data for three zero-coupon bonds. The face value of each bond is $1,000. (LO6-2)
Bond Price Maturity (years) Yield to Maturity
A $300 30 -
B 300 - 8%
C - 10 10
i. What is the yield to maturity of bond A? (Express your answer as a percentage rather than a decimal.)
ii. What is the maturity of B?
iii. What is the price of C?
C. Pricing Consol Bonds. Perpetual Life Corp. has issued consol bonds with coupon payments of $60. (Consols pay interest forever and never mature. They are perpetuities.)
i. If the required rate of return on these bonds at the time they were issued was 6%, at what price were they sold to the public?
ii. If the required return today is 10%, at what price do the consols sell?
a. Stock Markets. True or false?
i. The bid price is always greater than the ask price.
ii. An investor who wants to sell his stock immediately should enter a limit order.
iii. The sale of shares by a large investor is usually termed a "primary offering."
iv. Electronic Communications Network refers to the automated ticker tape on the New York Stock Exchange.
b. Stock Quotes. Go to finance.yahoo.com and get trading quotes for IBM.
i. What are the latest stock price and market cap?
ii. What is the bid-ask spread?
iii. What are IBM's dividend payment and dividend yield?
iv. What is IBM's P/E ratio?
c. Stock Quotes. Here is a small part of the order book for Mesquite Foods: Bid AskPrice Size Price Size103 100 103.5 200102.5 200 103.8 200101 400 104 300 99.8 300 104.5 400
i. Georgina Sloberg submits a market order to sell 100 shares. What price will she receive?
ii. Norman Pilbarra submits a market order to buy 400 shares. What is the maximum price that he will pay?
iii. Carlos Ramirez submits a limit bid order at 105. Will it execute immediately?
d. P/E Ratios. Favorita Candy's stock is expected to earn $2.40 per share this year. Its P/E ratio is 18. What is the stock price?
e. Dividend Yield. BMM Industries pays a dividend of $2 per quarter. The dividend yield on its stock is reported at 4.8%. What is the stock price?
D. Constant-Growth Model. Arts and Crafts Inc. will pay a dividend of $5 per share in 1 year. It sells at $50 a share, and firms in the same industry provide an expected rate of return of 14%. What must be the expected growth rate of the company's dividends?
Format your assignment according to the give formatting requirements:
a. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
b. The response also includes a cover page containing the title of the assignment, the course title, the student's name, and the date. The cover page is not included in the required page length.
c. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.