q3310 - MORE QUESTIONS MGMT 310 1 Suppose that the price of...

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MORE QUESTIONS MGMT 310 1. Suppose that the price of a stock is the present value of future dividends, also suppose that the stock has infinite life. Today the S&P 500 was down by 3.31 %, calculate the loss in dividends implied by this negative return. If the market capitalization of the index is 10,582,737 millions, calculate the expected loss of dividends in money terms. 2. As of late, the S&P 500, Dow Jones and NASDAQ indexes have been loosing value, does it mean that the firms that form the indices have been receiving less money for their shares? 3. Calculate the price of a bond with a 4.65 % coupon, 5 years to maturity and a yield to maturity of 4.259 %. Calculate the price assuming infinite life, how much is the difference compared with the result obtained using the correct number of
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Unformatted text preview: years? 4. Calculate the YTM for a bond that was sold at 1012.8 $, has a coupon of 5 % and a time to maturity of 5 years. Calculate the YTM assuming infinite life, how much is the difference compared with the result obtained using the correct number of years? 5. The price of a 3 month t-bill was 996.37 $ in the last auction and the price of a 1 month t-bill was 999.72 $. Calculate the YTM for both t-bills, express it in yearly terms. Compare the results if you suppose simple interest and compound interest. 6. If the inflation is expected to increase, do you expect the price of bonds to increase or decrease?, explain why. 7. Explain if using the earnings statement from the financial statement of a firm is a good way to calculate its market value....
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  • Spring '08
  • MATTHEWJAMESBARCASKEY
  • Dow Jones, correct number, Infinite Life

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