exam2d.ch6ch7ch8

exam2d.ch6ch7ch8 - Name _ PeopleSoft # _ - University of...

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Name __________________________________ PeopleSoft # __________________________________ - University of Houston C. T. Bauer College of Business Finance 3332 Principles of Financial Management Spring, 2010 Exam 2D Point values are in parentheses. To receive full credit: 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 probability of earning a positive return on a stock whose returns are normally distributed with an expected return of 12 percent and a standard deviation of 15 percent? (8) 2. Preferred stock of Esme Company pays a dividend of $5 per year, has a $100 par value, is callable in 5 years at a call price of $102, and is selling in the market for $79.01. What is the preferred stock’s yield to call? (8) 3. What is the market price of a three percent coupon, $1000 par bond, which matures in 30 years, if the bond’s yield to maturity is four percent? Assume annual interest payments (8) Use the following information for problems 4 – 6. Stock Expected Return Beta Std. Dev. Correlation (ρ i,j ) C 0.14 1.2 0.40 ρ C,D = 0.4 D 0.10 0.8 0.50 4. Calculate the beta of a portfolio consisting of 40 percent of the funds invested in stock C and 60 percent in stock D. (4)
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exam2d.ch6ch7ch8 - Name _ PeopleSoft # _ - University of...

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