NEEDS test now

Question 1

1. Below are the stock price and stock split data for ABC Company. If you bought 250 shares of this stock in the beginning of 1990, how many shares would you have at the end of 1999?

Enter your answer rounded off to two decimal points.

	Stock
	splits
31-Dec-90	1.5 for 1
31-Dec-91
31-Dec-92	4 for 1
31-Dec-93
31-Dec-94	2 for 1
31-Dec-95
31-Dec-96	2 for 1
31-Dec-97
31-Dec-98	3 for 2
31-Dec-99

1 points  

Question 2

1. The nominal rate is 6.9% compounded monthly. Compute the effective rate.

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points  

Question 3

1. You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. One stock has a beta of 1.71. What does the beta of the second stock have to be if you want the portfolio to have a beta of 1.16?

Enter your answer rounded off to two decimal points.

1 points  

Question 4

1. The principal amount of a bond that is repaid at the end of term is called the par value or the:

		perpetuity value
		call premium
		face value
		coupon value
		back-end value

1 points  

Question 5

1. Suppose that today's stock price is $43.9. If the required rate on equity is 16.7% and the growth rate is 7.5%, compute the expected dividend (i.e. compute D1)

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points  

Question 6

1. If the market value of debt is $184,070, market value of preferred stock is $178,165, and market value of common equity is 128,910, what is the weight of preferred stock?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points  

Question 7

1. One year ago, you puchased 55 shares of ABC stock for $21.1 per share. During the year, you received a dividend of $2.3 per share. Today, you sold all your shares for $27. What are the percentage return on your investment?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points  

Question 8

1. The common stock of ABC Industries is valued at $46.2 a share. The company increases their dividend by 5.3 percent annually and expects their next dividend to be $1.63. What is the required rate of return on this stock?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points  

Question 9

1. The ABC Co. has $1,000 face value stock outstanding with a market price of $878.9. The stock pays interest annually, matures in 16 years, and has a yield to maturity of 10 percent. What is the annual coupon amount?

Note: Enter your answer rounded off to two decimal points. Do not enter $ in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points  

Question 10

1. Suppose the nominal rate is 17.1% and the inflation rate is 3.3%. Solve for the real rate.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points  

Question 11

1. The beta of the risk-free asset is:

		0
		1
		1.5
		2

1 points  

Question 12

1. You want to create a portfolio as risky as the market. Suppose you invest your money in Stocks A, B, C, and the risk-free asset. Compute your investment in Stock C (i.e. solve for weight of Stock C)?

Stock     Weights     Beta

A               19                1.2

B               17                0.6

C               ?                  1.3

Rf              ?                   ?