Name __________________________________
PeopleSoft # __________________________________
University of Houston
C. T. Bauer College of Business
Finance 3332
Principles of Financial Management
Spring, 2010
Exam 2E
Point values are in parentheses.
To receive full credit:
•
Show all work—equations in variable form & equations with numbers plugged in
•
Clearly indicate your answer
•
Financial functions may be used, but all inputs must be clearly shown
•
Carry all decimals, rounding only final answer
•
Final answer decimal places should be rounded to four places (two in percent form)
•
Currency answers rounded to the nearest cent, where applicable
•
Include applicable units on answers
1. What is the value of a firm’s $6 preferred stock with a $100 par value if the required rate of return is 11
percent? (4)
2.
Circle
the correct response. (4)
An eight percent, annual coupon, $1000 par bond, which matures in 20 years, has a yield to maturity of
six percent. This bond is said to be selling:
at a discount
at par
at a premium
3. You are analyzing a stock with a beta of 1.6. The riskfree rate is 2%, and the expected return on the
market is 8%. What is the stock’s equilibrium required rate of return? (6)
4. From the information from the previous question, what is the market risk premium? (2)
5. I’m evaluating a common stock that just paid a dividend of $1.50 per share. What is the value of this
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 Spring '08
 DARLACHISHOLM
 Finance, Capital Asset Pricing Model, Interest

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