final1

# final1 - PRACTICE FINAL#1 Honors Corporate Finance Student...

This preview shows pages 1–4. Sign up to view the full content.

PRACTICE FINAL #1 Honors Corporate Finance Student Name: INSTRUCTIONS 1. There are 8 questions on the exam for a total of 75 points 2. For full credit on a question, please show your work and write the answer in the space provided. Please use the back of the page if you need additional space. Remember: Read each question carefully. The questions are not in order of difficulty. If you get stuck, just go on to the next question. 1

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
1. (8 pts) Suppose that a 1-year, zero-coupon bond has a price of \$96.15 per \$100 of face value. A 2-year, zero-coupon bond has a price of \$90.70 per \$100 of face value. A 3-year zero-coupon bond has a price of \$85.16 per \$100 of face value. Throughout this problem, assume annual compounding. (a) (2 pts) What is the annual rate you can lock in now for lending between years one and two? Note that “year one” is next year, while “year two” is two years from now. (b) (2 pts) What is the annual rate you can lock in now for lending between years two and three? (c) (4 pts) Calculate the price of an annual coupon bond with a coupon rate of 5% and a face value of \$1000, with 3 years to maturity. 2
2. (5 pts) You purchased 200 shares of stock LOR on January 1, 2000 for \$15 each. The following table shows the price per share and the dividend per share for the next four years. Assume dividends are paid at the end of the year (for example, LOR sold for a price of \$16 and paid a dividend of \$2 on December 31, 2000).

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern