Quiz 8 - FIN 360 Quiz #8 Name: _Jeremy Pflug_ 1. Vandelay...

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FIN 360 Quiz #8 Name: _Jeremy Pflug ______________ 1. Vandelay Industries has 7% coupon bonds on the market with 8 years left to maturity and $1,000 face value. The bonds make annual payments. If the bond currently sells for $889.45, what is the bond’s yield to maturity? 8.997% 2. Merton Enterprises has bonds with face value of $1,000 on the market making annual payments, with 10 years to maturity, and selling for $1,146.80. At this price, the bonds yield 6%. What must the coupon rate be on Java World’s bonds? 5.232% 3. A Microgates Industries bond has a 10% coupon rate and a $1,000 face value. Interest is paid semiannually, and the bond has 20 years to maturity. If investors require a 12% yield, what is the bond’s value? 849.30 4. Play Now Co. has just paid a cash dividend of $2 per share. Investors require a 16% return from investments such as this. If the dividend is expected to grow at a steady 8% per year, what is the current value of the stock? What will the stock be worth in five years? Current Value = 27
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This note was uploaded on 12/17/2011 for the course MBA 500 taught by Professor Dr.jones during the Spring '11 term at Morehead State.

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Quiz 8 - FIN 360 Quiz #8 Name: _Jeremy Pflug_ 1. Vandelay...

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