Stock and Bond Valuation

Grnfn Yrr
timer Asked: Sep 21st, 2015

Question Description

Copy of Module 05_Stock and Bond Valuation Problems.xls

Complete the included problems. Each problem has its own worksheet within the template.

Unformatted Attachment Preview

Problem 1 - Constant-Growth Common Stock What is the value of a common stock if the firm's earnings and dividends are growing annually at 10%, the cur and investors require a 15% return on investment? What is the stock's rate of return if the market price of the stock is $35? ing annually at 10%, the current dividend is $1.32, Problem 2 - Preferred Stock Price and Return A firm has preferred stock outstanding with a $1,000 par value and a $40 annual dividend with no maturity. If The market price of a firm's preferred stock is $24 and pays an annual dividend of $2.50. If the stock's par val l dividend with no maturity. If the required rate of return is 9%, what is the price of the preferred stock? of $2.50. If the stock's par value is $1,000 and it has no maturity, what is the return on the preferred stock? referred stock? e preferred stock? Problem 3 - Bond Valuation and Yield A bond has a par value of $1,000, pays $50 semiannually and has a maturity of 10 years. If the bond earns 12% per year, what is the price of the bond? Rate Nper PMT FV Type PV What is the yield to maturity for the bond? Nper PMT PV FV Type Rate What would be the bond's price if the rate earned declined to 8% per year? Rate Nper PMT FV Type PV If the maturity period is reduced to 5 years and the required rate of return is 8%, what would be the price of t Rate Nper PMT FV Type PV What is the yield to maturity for the bond when the maturity is 5 years and the required rate of return is 8%? Nper PMT PV FV Type Rate What generalizations about bond prices, interest rates and maturity periods can be made based on the calcula made based on the calculations made above? Problem 4 - Callable Bonds The following bonds have a par value of $1,000 and the required rate of return is 10%. Bond XY: 5¼ percent coupon, with interest paid annually for 20 years Bond AB: 14 percent coupon, with interest paid annually for 20 years What is each bond's current market price? Bond XY Bond AB Rate Nper PMT FV Type PV If current interest rates are 9%, which bond would you expect to be called? Explain.
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

This question has not been answered.

Create a free account to get help with this and any other question!

Related Tags

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors