exam2a.ch5ch5Ach6ch7ch8

# exam2a.ch5ch5Ach6ch7ch8 - 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 Summer 6 week-2 nd , 2010 Exam 2A 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) o Either form is acceptable Currency answers rounded to the nearest cent, where applicable Include applicable units on answers 1. Guadalupe borrowed \$80,000 at a nominal annual rate of 4 percent for 15 years. How much will be his monthly payments? (8) 2. How much must I deposit today, if I want to have \$5000 in my account in 4 years, and the account earns an interest rate of 6 percent compounded continuously? (4) 3. What is the value of a preferred stock which pays an annual dividend of \$8 per year to an investor who requires a 7 percent return? (4) 4. You are analyzing a stock with a beta of 0.4. The risk-free rate is 4 percent, and the market risk premium is 6%. What is the stock’s equilibrium required rate of return? (6) 5. What is the probability of earning a return less than 30 percent on a stock whose returns are normally distributed with an expected return of 20 percent and a standard deviation of 40 percent? (6) 6. What is the market value of a \$1000 par bond with a five percent coupon, which is paid semi-annually, if its yield to maturity is four percent and it matures in 18 years? (6) 7. Circle the correct response. (2) A thirty-year, 5 percent coupon bond, with a par value of \$1000 sells at \$1084.25. This bond is said to be selling at: par a premium a discount

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Use the following information for problems 8 – 11. Stock
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exam2a.ch5ch5Ach6ch7ch8 - Name PeopleSoft University of...

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