Question:
1. $1,000 bond has a coupon rate of 8% and matures after 10 years.
a) what is the current price of the bond if the comparable rate of interest is 8%.
Solution: Computation of the Current Price of the Bond
Given information
Face Value
$(1,000)
Co

Week 2 Homework
P. 117/118
1. How will the Feds monetary policy change based on the report? The policy would probably
change to a restrictive policy since inflation has up by three percent, so economic growth is
going to be slowed (p.101)
2. How will the

2.
An investor requires a return of 12 percent. A stock sells for $25, it pays
a dividend of $1, and the dividends compound annually at 7 percent.
Will this investor find this stock attractive? What is the maximum
amount that this investor should pay for

Question:
1. A stock sells for $10 per share. You purchase 100 shares for $10 a share, and after a year the price rises to $17.50.
What will be the percentage return on your investment if you bought the stock on margin and the margin
requirement was (A) 2

Week 3 assignment
p.197
1. The future economy looks very good. It seems more things are going to be available, like
money, so it seems more consumers are going to be willing to spend more, which means more
products being sold and Carson can expand at meet

3. What is the debt/equity ratio and the debt ratio for a firm with total debt of $700,000 and equity of $300,000?
Computation of debt equity ratio:Debt equity ratio = Total debt/Total equity
Debt equity ratio = 700,000/300,000
Debt equity ratio = 2.33
4.

7. Two firms have sales of 1million each. Other financial information is as follows:
EBIT: 150,000 150,000
Interest expense: 20,000 75,000
Income tax: 50,000 30,000
Equity: 300,000 100,000
What are the operating margins and the new profit margins for thes