Question

If shareholders are granted a preemptive right they will: A be given the choice of receiving dividends either in sash or in additional shares of stock. B. be paid dividends prior to the preferred shareholders during the preemptive period. D be able to choose the timing and amount of any future dividends. B. be allowed to purchase a fixed percentage of newly issued shares before firm offers these shares to Be Ne to choose the res per share fred shareholders club or in additional es before firm offers these shares to general public. e forever. How much are you willing to pay for on 14. The Wate House pays a constant annual dividend of $1.25 per share forever. How much are you willing top share if you require a 25 percent rate of return? A. $4.81 B. $5.00 C. $6.58 D. $6.63 E. $6.83 H 15. Best Western has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in six years, and have a 5 percent coupon rate. The current price is $1,010. What is the yield to maturity? A. 2.32 percent B. 4.81 percent C. 5.00 percent D. 5.13 percent E. 5.27 percent un u 16. The written agreement that contains the specific details related to a bond issue is called the bond: A. indenture. B. debenture. C. document. D. registration statement. E issue paper. 17. Generally speaking, bonds issued in the U.S.pay interest on a(n) basis. A. annual B. semiannual C. quarterly D. monthly E. daily 18. Venus, Inc. has an issue of preferred stock outstanding that pays a $9.00 dividend every year, in perpetuity. If this is currently sells for $164.60 per share, what is the required return? A. 5.47 percent B. 6.89 percent C. 7.70 percent D. 8.23 percent E. 8.98 percent 19. What is the effective annual rate (EAR) of 6.5 percent APR compounded quarterly? A. 6.02 percent B. 6.24 percent C. 6.56 percent D. 6.66 percent E. 6.83 percent

Answer 1

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Ans 13	Correct answer is option :
	E) be allowed to purchase a fixed percentage of newly issued shares before firm offer
	these share to general public
	This give the right to the shareholder to buy the new issue of share.
Ans 14	Correct answer is option :
	B) $ 5.00
	Price of the share = Annual dividend/reqiured rate
			1.25/25%
			$     5.00
Ans 15	Correct answer is option :
	option : B. 4.81 percent
	We have to use financial calculator to solve this
	put in calculator -
	FV		1000
	PV		-1010
	PMT	1000*5%/2	25
	N	6*2	12
	Compute I		2.40%
	YTM = 2.4%*2		4.81%
Ans 16	Correct answer is option :
	A) Indenture
	Indenture laid out the terms and condition of the issue of bond.