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exam2b.ch5ch5ach6ch7ch8 (1)

# exam2b.ch5ch5ach6ch7ch8 (1) - Name Webct User ID University...

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Name __________________________________ Webct User ID __________________________________ University of Houston C. T. Bauer College of Business Principles of Financial Management Finance 3332 Exam 2B: Spring, 2009 To receive full credit: Show equations either in variable form or equations with numbers plugged in. Calculator financial function inputs must be shown. Clearly indicate your answer. Carry all decimals, rounding only final answer. Decimal places should be rounded to four places (two in decimal form) and currency answers rounded to the nearest cent, where applicable. Point values are in parentheses. 1.  Beccah  Incorporated’s  com m o n  stock  is expected  to pay  a  dividend  of \$0.10  per  share  next   year.  What is the  value  per  share  of the  firm’s  com m on  stock  if earnings  and  dividends  are   expected  to grow  at a  rate  of five  percent  for the  forese e a bl e  future,  and  investors  require  a   2.  You  open  an  account  which  pays  6 percent  compound e d  quarterly.  What is your  effective   3.  What is the  value  of an  investm ent  with the  following  cash  flow stream  if the  investor  requires   a  10  percent  return?  (6) Year Cash Flow 1 \$0 2  0 3 2000 4 4000 4.  You  are  analyzing  a  stock  with a  beta  of 1.8.  The  risk- free  rate  is 3 percent,  and  the  expected   return  on  the  market  is 10  %.  What is the  stock’s  equilibrium  required  rate  of return?  (6) 5.  From  the  information  from  #4,  what is the  market  risk  premium ?  (2) 6.  What is value  of a  five  percent  coupon,  \$1000  par  bond,  which  matures  in 30  years,  if the   bond’s  yield  to maturity is eight  percent?  (6)

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exam2b.ch5ch5ach6ch7ch8 (1) - Name Webct User ID University...

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