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exam2e.ch5partialch5Ach6ch7ch8-1 - Name Peoplesoft Number...

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Name __________________________________ Peoplesoft Number __________________________________ University of Houston C. T. Bauer College of Business Finance 3332 Fall, 2010 Exam 2E To receive full credit: Show all work—equations in variable form & equations with numbers plugged in, unless instructed differently Clearly indicate your (one) answer Calculator financial function inputs must be shown. All inputs to find annuity factor must be shown Carry all decimals, rounding only final answer Decimal places should be rounded to 4 places (2 in percent form) Currency answers rounded to the nearest cent, where applicable Include applicable units ($, %, etc.) on answers Point values are in parentheses. 1. What is the yield to maturity of a 4 percent semi-annual coupon bond with 30 years to maturity if the bond’s market  price is $723.24? (6) 2.  Your favorite stock’s current annual dividend is $0.20 per share. Over the coming two years, earnings and dividends  are expected to grow at an annual rate of 16 percent per year, then growth is expected to slow to a constant rate of 10  percent thereafter. What is the value of the stock to an investor who requires a 14 percent rate of return? (8) 3.  Circle the correct response. (2) A twelve year, 4 percent annual coupon bond, with a par value of $1000 has a yield  to maturity of 5 percent. This bond is said to be selling at: par a premium a discount 4. Given the following return information for Camille Corporation, determine the stock’s standard deviation of returns.  (6) Year Return 2009 - 20% 2008 12% 2007 4% 2006 10% 2005 14% 5. If Val invests $25,000, how much will he have in 8 years if his investment earns 6 percent, compounded continuously?  (4) 6. What is the effective rate of interest for 26 percent compounded semi-annually? (6)
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7. a) Lynn is saving for retirement and wants to have $2 million when he retires in 25 years. He currently has $500,000 
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