exam2b.ch6ch7ch8 (1)

exam2b.ch6ch7ch8 (1) - Name _ Webct User ID _ University of...

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Name __________________________________ Webct User ID __________________________________ University of Houston C. T. Bauer College of Business Finance 3332 Principles of Financial Management Fall, 2007 Exam 2B To receive full credit, show all work—equations in variable form, equations with numbers plugged in—and clearly indicate your answer. Financial functions may be used only for finding annuity factors, and all inputs must be shown. 1. How much must an investor pay to purchase a 90-day, $10,000 T-bill given the following quoted discounts from face?  (6) Bid Ask 3.66% 3.40% 2. What is the yield to maturity of a $1000 par bond paying a 6 percent  semi-annual  coupon and maturing in 22  years with a market price of $1290.79? (6) 3. You are analyzing a firm’s common stock whose earnings and dividends have been growing at an annual rate of 6  percent, and you expect that growth to continue for the foreseeable future. If you expect the stock to pay an annual  dividend is $1.10 next year, what is the value per share if you require a 12 percent rate of return? (5) Use the following information for questions 4 - 6. Compan y Beta Expected Return Varianc e Covarianc e A 0.3 10% 1600% 2 320% 2 C 0.4 8% 100% 2 4. What is the  correlation coefficient  of returns between Stocks A and  C?  (4) 5. Calculate the  standard deviation  of a portfolio consisting of 20 percent Stock A and 80 percent Stock C.  (8) 6. Calculate the  beta of a portfolio consisting of 20 percent Stock A and 80 percent Stock C.  (4) 7. What is the value of a $1000 par bond paying a 6 percent coupon and maturing in 12 years to an investor who 
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exam2b.ch6ch7ch8 (1) - Name _ Webct User ID _ University of...

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