# Work shown

What is the yield to maturity of a nine-year bond that pays a coupon rate of 20% per year, has a \$1,000 par value, and is currently priced at \$1,407?
Round your answer to the nearest whole percent and assume annual coupon payments. a. 5%b.14% c.12%d.11%

The XYZ Company, whose common stock is currently selling for \$40 per share, is expected to pay a \$2.00 dividend in the coming year. If investors believe that
the expected rate of return on XYZ is 14%, what growth rate in dividends must be expected? a. 5% b. 14% c. 9% d. 6%

Green Company’s common stock is currently selling at \$24.00 per share. The company recently paid dividends of \$1.92 per share and projects growth at a rate of 4%.
At this rate, what is the stock’s expected rate of return? a. 4.08%b.8.00%c.12.00%d. 8.80%

10. McMillen House of Books recently paid a \$3 dividend on its preferred stock. Investors require a 6% return on the stock. The stock is currently selling for \$45.
Is the stock a good buy? (Show work!) a. Yes, as it is undervalued \$5. bYes, as it is undervalued \$10. C No, as it is overvalued \$5. dNo, as it is overvalued \$10.

Style Corp. preferred stock pays \$3.15. What is the value of the stock if your required rate of return is 8.5%
(round your answer to the nearest \$1, and assume no transaction costs)? a. \$33b.\$23c.\$27d.\$37

You are evaluating the purchase of Cellars, Inc. common stock that just paid a dividend of \$1.80. You expect the dividend to grow at a rate of 12% for the next three years.
You plan to hold the stock for three years and then sell it. You estimate that a required rate of return of 17.5% will be adequate compensation for this investment.
Calculate the present value of the expected dividends. Round to the nearest \$0.10. a. \$4.90b.\$11.50c.\$9.80d.\$6.10
Marshall Manufacturing has common stock which paid a dividend of \$1.00 a share last year. You expect the stock to grow at 5% per year.
If the appropriate rate of return on this stock is 12%, how much are you willing to pay for the stock today? a. \$13.00b\$15.00c\$17.00d.\$19.00