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FI580_Final_Exam_Practice

# FI580_Final_Exam_Practice - Practice Final Exam for FI580...

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Practice Final Exam for FI580 Q1 - Assume two bonds with yearly compounding that have the same rating (AA): Bond A - 30-year, 9.5% coupon If current interest rates are 8.25%, what are the values for each bond? Q2 – Maria wants to set aside today a capital sum to be liquidated over the next 20 years for the care of her aged mother. The desired income stream for her mother is \$30,000 beginning after one year and rising by 3% p.a. each year thereafter. Maria believes that the investment earnings on the fund will be 9% p.a. Approximately how much of her accumulated retirement capital must Karan sacrifice to provide the income stream for her mother? Q3 – Luis has some Disney shares. He asked you to calculate the dividend yield for a Disney share. Disney distributed \$670,000 of profits last year. Earnings were \$1,200,000. The market price of a share is currently \$8.00 and there are 1milion shares, issued. What is Disney’s dividend yield? Q4 – Assume Mousa buys a \$200,000 house with a down payment of \$40,000, financing \$160,000 over a 15-year period at a 5.25% interest rate.
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