14
Assume that you are considering the purchase of a 10-year bond with a coupon rate of 10%. The bond has a par value of $1,000 and makes semiannual interest payments.
The bond sels for $894.50, and can be called in 4 years for S1100. What is the yield to call of this bond?
15.54%
11.49%
12.85%
11.83%
13.77%
15
The expected return on some company's stock is 14%. The stock's dividend is expected to grow at a constant rate of 8%, and it currently sells for S50 a share. Which of the following statements is CORRECT
The stock's dividend yield is 8%.
The stock's dividend yield is 6%.
The stock price is expected to be $50 a share one year from now.
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Calculator | |
Inputs: | |
PV | (894.50) |
PMT | 50.00 |
FV | 1,100.00 |
N | 8 |
Output: | |
I/Y = Period rate | 7.77% |
APR= I/Y *2 | 15.54% |
Answer is:
15.54%
15
Dividend next year = 50 * (14%-8%) = 3
Dividend yield = 3/50 = 6%
Answer is:
The stocks dividend yield is 6%
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Assume that you are considering the purchase of a 10-year bond with a coupon rate of 10%
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