Business Homework Solutions

required return

beta is 1.20, risk free rate is 4.5%, market risk premium is 5.00%, what is required return?

Coefficient of variation

Expected return of 10%, standard deviation of 30%, What is coefficient of variation?

Price of bond

Bonds mature in 10 yrs, par value of 1,000, annual coupon payment of $80, interest rate for bonds is 9%. What is price of bonds?

Price of bonds

Bonds have 15 yr maturity, 7% semiannual coupon, par value of 1,000, going interest rate is 6% based on semiannual compounding. What is bonds price?

What is beta?

45,000 invested with a beta of 0.8 and another 55,000 invested with a beta of 1.4, these are only two investments in portfolio, what is portfolio beta?

Expected dividend yield

Do = $2.00, g = 6%, Po = $40, what is expected dividend yield for the coming yr?

current stock price

just paid a dividend of $1, required rate of return i 11%, constant growth rate is 5%, what is current stock price?

Market value

Perpetual annual dividend of $2.00 per share, par value $25, required return is 8%. What is stock's market value?

Expected growth rate

D1 = $1.00, stock sells for $40 per share, required rate of return is 11%, grow at constant rate, what is expected growth rate?

Price of stock

Just paid dividend of $2.00, expected long run growth rate is 7%, required 11% rate of return. What is stock price?

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