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 12.
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 13. What is the expected growth rate of Dorpac's share price?
4.5%
8.0%
6.5%
7.0%
8.0%
Question 14. 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