MA373 F11 Quiz 5-1

MA373 F11 Quiz 5-1 - Time Spot Rate 0.5 1.0% 1.0 1.5% 1.5...

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Math 373 Quiz 5 November 1, 2011 1. Wang LTD pays a quarterly dividend of 8. The next dividend is due later today. Calculate the price of the stock today (prior to the payment of the dividend) to produce an annual effective yield of 10%.
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2. A preferred stock of pays its next dividend of 5 in 3 months. Each dividend thereafter is 1 larger than the previous dividend. In other words, a dividend of 5 is paid in 3 months, a dividend of 6 is paid in 6 months, a dividend of 7 is paid in 9 months, etc. Calculate the price of this stock to yield 8% convertible quarterly.
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3. You are given the following spot interest rates:
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Unformatted text preview: Time Spot Rate 0.5 1.0% 1.0 1.5% 1.5 2.0% 2.0 2.4% 2.5 2.7% 3.0 3.0% Calculate the price of a 3 year bond which matures for 10,000 and pays annual coupons of 300. 4. You are given the following spot interest rates: Time Spot Rate 0.5 1.0% 1.0 1.5% 1.5 2.0% 2.0 2.4% 2.5 2.7% 3.0 3.0% One year from now, Bill will receive a payment of 100,000. Bill intends to invest that payment for the following two year period. Using the above the spot interest rates and the implied forward interest rates, determine the expected value of this payment at the end of 3 years....
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MA373 F11 Quiz 5-1 - Time Spot Rate 0.5 1.0% 1.0 1.5% 1.5...

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