Zero-coupon and risk-free bond

Question

Question 1. What is the price per $100 face value of a two-year, zero-coupon, risk-free bond?

• $79.63
• $98.85
• $79.36
• $89.85
• 0.0605

Question 2. What is the price per $100 face value of a four-year, zero-coupon, risk-free bond?

• $79.63
• $98.85
• $79.36
• $89.85
• 0.0605

Question 3. What is the risk-free interest rate for a five-year maturity?

• $79.63
• $98.85
• $79.36
• $89.85
• 0.0605

Question 4. Suppose that General Motors Acceptance Corporation issued a bond with ten years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%.
What was the price of the bond when it was issued?

• $1,122.87
• $1,073.60
• $950.75
• $1,138.02
• $1,032.09

Question 5. Suppose that General Motors Acceptance Corporation issued a bond with ten years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%.
Assuming the yield to maturity remains constant, what is the price of the bond immediately before it makes its first coupon payment?

• $1,122.87
• $1,073.60
• $875.38
• $1,138.02
• $1,143.60

Question 6. Suppose that General Motors Acceptance Corporation issued a bond with ten years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%.

Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment?

• $1,068.02
• $1,073.60
• $875.38
• $1,138.02
• $1,143.60

Question 7. Suppose you purchase a ten-year bond with 6% annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 5% when you purchase and sold the bond,

What cash flows will you pay and receive from your investment in the bond per $100 face value?

Bond Sold for:
Cash flows:
 
Question 8. Suppose you purchase a ten-year bond with 6% annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 5% when you purchase and sold the bond,

What is the interest rate of return of your investment?

• 4.90%
• 5.00%
• 6.00%
• 7.00%
• 11.00%

Question 9.

Dorpac corporation has a divident of 1.5%. Dorpac's equity cost of capital is 8%, and its dividends are expected to grow at a constant rate.

a. what is the expected growth rate of dorpac's dividends?

What is the expected growth rate of Dorpac's share dividends?

• 4.5%
• 8.0%
• 6.5%
• 7.0%
• 8.0%

Question 10: What is the expected growth rate of Dorpac's share price?

• 4.5%
• 8.0%
• 6.5%
• 7.0%
• 8.0%

Question 11: Colgate-Palmolive Company has just paid an annual dividend of $0.96. Analysts are predicting an 11% per year growth rate in earnings over the next five years. After then, Colgate's earnings are expected to grow at the current industry average of 5.2% per year. If Colgate's equity cost of capital is 8.5% per year and its dividend payout ratio remains constant, what price does the dividend-discount model predict Colgate stock should sell for?

• $51.56
• $34.29
• $39.78
• $15.07
• $39.44