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How much would you be willing to pay for a 10-year ordin…

Assignment Help Finance How much would you be willing to pay for a 10-year ordin…

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How much would you be willing to pay for a 10-year ordin…

How much would you be willing to pay for a 10-year ordin… Show more Question 11 2 points 2 points 2 points 2 points 2 points Save How much would you be willing to pay for a 10-year ordinary annuity if the payments are $500 per year and the rate of return is 6.25% annually? How much would you be willing to pay for a 10-year ordinary annuity if the payments are $500 per year and the rate of return is 6.25% annually? $3,423 $3,637 $3,864 $4,132 $3,423 $3,637 $3,864 $4,132 Question 12 2 points 2 points 2 points 2 points 2 points Save Cabell Corp. bonds pay an annual coupon rate of 10%. If investors’ required rate of return is now 8% on these bonds, they will be priced at: Cabell Corp. bonds pay an annual coupon rate of 10%. If investors’ required rate of return is now 8% on these bonds, they will be priced at: Par value A premium to par value A discount to par value Cannot be determined from information given Par value A premium to par value A discount to par value Cannot be determined from information given Question 13 2 points 2 points 2 points 2 points 2 points Save Common stock does not mature. Common stock does not mature. True False True False Question 14 2 points 2 points 2 points 2 points 2 points Save What is diversifying among different kinds of assets known as? What is diversifying among different kinds of assets known as? Portfolio funding. Capital asset classification. Asset allocation. Multi-diversification. Portfolio funding. Capital asset classification. Asset allocation. Multi-diversification. Question 15 2 points 2 points 2 points 2 points 2 points Save You purchased 1,000 shares of Oliver Inc. common stock one year ago for $50 per share. You decided to take your profit today by selling at $55.00 per share. What is your holding period return? You purchased 1,000 shares of Oliver Inc. common stock one year ago for $50 per share. You decided to take your profit today by selling at $55.00 per share. What is your holding period return? 10.0% 12.5% 50.0% 15.0% 10.0% 12.5% 50.0% 15.0% Question 16 2 points 2 points 2 points 2 points 2 points Save Assume that you have $165,000 invested in a stock whose beta is 1.25, $85,000 invested in a stock whose beta is 2.35, and $235,000 invested in a stock whose beta is 1.11. What is the beta of your portfolio? Assume that you have $165,000 invested in a stock whose beta is 1.25, $85,000 invested in a stock whose beta is 2.35, and $235,000 invested in a stock whose beta is 1.11. What is the beta of your portfolio? 1.37 2.01 1.85 1.57 1.37 2.01 1.85 1.57 Question 17 2 points 2 points 2 points 2 points 2 points Save Cary’s Company bonds have a 12% coupon rate. Interest is paid semi-annually. The bonds have a par value of $1,000 and will mature 8 years from now. Compute the value of the bonds if investors’ required rate of return is 8%. Cary’s Company bonds have a 12% coupon rate. Interest is paid semi-annually. The bonds have a par value of $1,000 and will mature 8 years from now. Compute the value of the bonds if investors’ required rate of return is 8%. $1,114.70 $1,233.05 $894.06 $941.27 $1,114.70 $1,233.05 $894.06 $941.27 Question 18 2 points 2 points 2 points 2 points 2 points Save Preferred stock has priority over common stock with respect to its claims on income for dividends. Preferred stock has priority over common stock with respect to its claims on income for dividends. True False True False Question 19 2 points 2 points 2 points 2 points 2 points Save If a firm were to experience financial insolvency, the legal system provides an order of hierarchy for the payment of claims. Assume that a firm has the following outstanding securities: mortgage bonds, common stock, debentures, and preferred stock. Rank the order in which investors that own mortgage bonds would have their claim paid? If a firm were to experience financial insolvency, the legal system provides an order of hierarchy for the payment of claims. Assume that a firm has the following outstanding securities: mortgage bonds, common stock, debentures, and preferred stock. Rank the order in which investors that own mortgage bonds would have their claim paid? First. Second. Third. Fourth. First. Second. Third. Fourth. Question 20 2 points 2 points 2 points 2 points 2 points Save Which of the following should investors consider when determining their required rate of return? Which of the following should investors consider when determining their required rate of return? The risk of the investment. Their opportunity cost of funds. The risk-free rate of return. All of the above. The risk of the investment. Their opportunity cost of funds. The risk-free rate of return. All of the above. Question 21 2 points 2 points 2 points 2 points 2 points Save The restrictive provisions contained in the bond indenture protect the common stockholders. The restrictive provisions contained in the bond indenture protect the common stockholders. True False True False Question 22 2 points 2 points 2 points 2 points 2 points Save Tangier Manufacturing’s common stock has a beta of 1.8. If the expected risk free return is 5% and the expected return on the market is 16%, what is the expected return on Tangier’s stock? Tangier Manufacturing’s common stock has a beta of 1.8. If the expected risk free return is 5% and the expected return on the market is 16%, what is the expected return on Tangier’s stock? 13.5% 19.8% 24.8% 28.8% 13.5% 19.8% 24.8% 28.8% • Show less

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