MA373 F15 Homework Chapter 7

MA373 F15 Homework Chapter 7 - Chapter 7 Fall 2015 1 The...

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October 22, 2015 Copyright Jeffrey Beckley 2015 Chapter 7 Fall 2015 1. The stock of Jones Corporation pays a quarterly dividend of 5.60. The next dividend is due in 3 months. Using the dividend discount method, calculate the price of the stock to yield an annual effective interest rate of 8%. 2. The preferred stock of Bian Bank pays a quarterly dividend of 8.75. The next dividend is paid in one month. The stock is bought to yield 12% convertible quarterly. Using the dividend discount method, calculate the price of the stock. 3. The stock of McClintock Marketing Company pays a quarterly dividend of 8 with the next dividend paid later today. Using the dividend discount method, the price of the stock is 208. Determine the annual effective yield expected from McClintock stock. 4. The stock of Crum Corporation pays quarterly dividends with the next dividend payable in two months. The first dividend will be 0.25. The second dividend will be 0.35. The third dividend will be 0.45. The same pattern will continue with each dividend being 0.10 greater than the
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