MA373 S11 Quiz 4-1

# MA373 S11 Quiz 4-1 - dividend being 10 payable in three...

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Math 373 Quiz 4 March 29, 2011 1. A 10 year callable bond has a par value of 1500. The bond matures for par and has a coupon rate of 6% convertible semi-annually. The bond may be called on the following dates and amounts: End of Year Amount 5 1568 6 1550 7 1534 8 1520 9 1508 Determine the price of this bond in order to assure a yield of 4% convertible semi-annually.

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2. Marsh Manufacturing Company has issued preferred stock that pays a quarterly dividend of 2. The next dividend is payable later today. Calculate the price of the preferred stock (before the payment of the dividend) in order to yield an annual effective rate of 8%.
3. The common stock of Leemhuis Luxury Boat Company pays a quarterly dividend with the next

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Unformatted text preview: dividend being 10 payable in three months. Each dividend is expected to be 1% greater than the prior dividend. In other words, the dividend in 6 months is expected to be 10(1.01), the dividend in 9 months is expected to be 10(1.01) 2 , etc. Determine the price of this stock using the dividend discount method with a yield of 10% convertible quarterly. 4. You are given the following spot yield curve: Time Spot Rate ½ 1.0% 1 1.5% 1 ½ 2.0% 2 2.5% 2 ½ 3.0% 3 4.0% 3 ½ 5.0% 4 6.0% Determine the price and the annual yield rate of a 3 year bond which matures for 1500 with annual coupons of 100....
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MA373 S11 Quiz 4-1 - dividend being 10 payable in three...

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