Business Ethics & Financial Management homework

Question 1

· Valuation - preferred stock

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What is the value of a share of preferred stock that pays a $9.50 dividend, assume k is 12%.

Question 2

· Valuation – zero-coupon bond

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A U.S. Government bond with a face amount of $10,000 with 13 years to maturity is yielding 5.5%. What is the current selling price?

Question 3

· Valuation - preferred stock

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What is the value of a share of preferred stock that pays a $4.50 dividend, assume k is 10%.

Question 4

· Valuation – corporate bond

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A $1,000 corporate bond with 10 years to maturity pays a coupon of 8% (semi-annual) and the market required rate of return is a) 7.2% and b) 10%. What is the current selling price for a) and b)?

Question 5

· Valuation – zero-coupon bond

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A U.S. Government bond with a face amount of $10,000 with 8 years to maturity is yielding 3.5%. What is the current selling price?