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q2version2 (1) - MGT 3062 FINANCIAL MANAGEMENT FALL 2009...

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MGT 3062 FINANCIAL MANAGEMENT FALL 2009 QUIZ 2 REDO Student: ___________________________________________________________________________ Choose the BEST answer to each question. Bubble in your answer on the form provided. If you feel the answer is not provided, show your work, explain your assumptions, and write your answer on the exam. Remove all hats and dark glasses. If you have to go to the restroom, go now. No electronic devices allowed. You may not use your cell phone as a calculator. As a courtesy to your classmates, no questions are allowed after the initial instructions are given. Ethics Challenge: I swear by everything I hold sacred and my family honor that: the work on this exam is my own without outside assistance, that I did not provide assistance to another classmate, that I used no electronic devices for information storage, retrieval, or communications, that I have abided by the Georgia Tech honor code in the preparation and execution of this exam. I understand that I will be prosecuted to the fullest extent of the law if I am found violating the Georgia Tech Honor Code. Signature:____________________________________________________________________________ 1. How much are you willing to pay for one share of Delphia stock if the company just paid a $1.34 annual dividend, the dividends increase by 2.8 percent annually, and you require a 14 percent rate of return? A. $12.99 B. $9.84 C. $13.61 D. $11.96 E. $12.30 2. The bonds issued by Jordache Jewelers bear a 7.5 percent coupon, payable semiannually. The bonds mature in 13 years and have a $1,000 face value. Currently, the bonds sell at par. What is the yield to maturity? A. 7.41 percent B. 7.50 percent C. 7.46 percent D. 7.33 percent E. 7.67 percent 3. Swenson & Swenson just decided to save $2,200 a month for the next 6 years as a safety net for recessionary periods. The money will be set aside in a separate savings account which pays 5.5 percent interest compounded monthly. They deposit the first $2,200 today. If the company had wanted to deposit an equivalent lump sum today, how much would they have had to deposit? A. $135,273.51 B. $138,001.14 C. $130,297.18 D. $137,778.92 E. $134,656.34
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4. Gerold's Travel Service just paid $1.79 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 3.2 percent. If you require a 10.5 percent rate of return, how much are you willing to pay to purchase one share of this stock? A. $20.64
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q2version2 (1) - MGT 3062 FINANCIAL MANAGEMENT FALL 2009...

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