ENGR 111 Practice_Final Exam Questions_answers

ENGR 111 Practice_Final Exam Questions_answers -...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Engineering 111 Practice Final Exam Winter 2008 Prof. Bristow Write you first and last name here: (If you do not, you get zero credit.) This is the practice final exam for the ENGR 111. Q1. What is today’s price for a 20 year maturity zero coupon bond with a face of $1,000 an a yield to maturity of 4%? ANS: PV=1000/(1+0.04)^20=456 Q2. Consider a U.S. government bond with a 6% coupon that expires in December 2010. The YTM is 5%. - The Par Value of the bond is $1,000. - Coupon payments are made semi-annually (June 30 and December 31 for this particular bond). - Since the coupon rate is 6%, the payment is $30. - On January 1, 2007 what is the bond’s price? ANS: Bond Price =(C/R)*(1-1/(1+R)^T)+PV/(1+R)^T=(30/0.025)*(1-1/(1.025)^8)+1000/(1.025)^8=1036 Q3. Is the bond in the previous question trading at a premium, discount or at par? ANS: Premium Q4. Will the purchaser of the bond in the previous question have a capital gain, capital loss or neither if the buyer holds to the time of maturity? ANS: Loss Q5. Suppose Big D, Inc., just paid a dividend (D o ) of $0.05. It is expected to increase its dividend by 2% per year. If the market requires a return of 12% on assets of this risk level, for what price should the stock be selling today?...
View Full Document

This note was uploaded on 04/05/2010 for the course ENGR 111 taught by Professor King during the Winter '09 term at UCLA.

Page1 / 5

ENGR 111 Practice_Final Exam Questions_answers -...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online