1. A bond issued by Cornwallis, Inc. 15 years ago has a coupon rate of 7% and a face value of $1,000. The bond will mature in 10 years. What is the value [to the nearest dollar] to an investor with a required return of 10%? , $ 816, $ 886, $ 772, $ 728,,,2. Stock A has a beta of 1.2 and a standard deviation of returns of 18%. Stock B has a beta of 1.8 and a standard deviation of returns of 18%. If the market risk premium increases, then _________. , The required rate of return on Stock B will increase more than the required rate of, return on stock A., The required returns on stocks A and B will both increase by the same amount., The required returns on stocks A and B will remain the same, The required return on stock A will increase more than the required return on Stock B.,,,3. A financial analyst tells you that investing in stocks will allow you to triple your money in 15 years. What annual rate of return is the analyst assuming you can earn?, 7.18%, 7.60%, 8.14 %, 9.45 %,,,4. Shafer Corporation issues callable bonds. The bonds are most likely to be called if _____., Interest rates decrease, Interest rates increase, Shafer Corporation needs additional financing, Shafer Corporation’s stock price increases dramatically,,,?,5. Kilsheimer Company just paid a dividend of $ 4 per share. Future dividends are expected to grow at a constant rate of 6% per year. What is the value of the stock if the required return is 12 %?, $33.33, $40.00, $66.67, $70.67,,,6. Emery Inc. has a beta equal to 1.5 and a required return of 14 % based on the CAPM. If the market risk premium is 8%, the risk -free rate of return is __________., 4 %, 3%, 2%, 1.5%,,,7. A financial adviser tells you that you can make your child a millionaire if you just start saving early. You decide to put an equal amount each year into an investment account that earns 8 % interest per year, starting on the day your child is born. How much money would you need to invest each year [rounded to the nearest dollar] to accumulate a million for your child by the time he is 50 years old [You last deposit will be made on his 49th birthday]., $8,000, $1,614, 18,000, $2,347,,,8. A corporate coup bond has a coupon rate of 9%, a face value of $1,000, and matures in 15 years. Which of the following statements in most correct?, An investor with a required rate of return of 10% will value the bond at more than, $ 1,000, An investor who buys the bond for $900 and holds the bond until maturity will have, a capital loss., An investor who buys the bond for $900 will have a yield to maturity on the bond, greater than 9%., If the bond’s market price is $900, then the annual interest payments on the bond , will be $ 81.,?,,9. Which one of the following statements concerning the required rate of return on stocks is true? , The higher an investor’s required rate of return, the higher the value of the stock., If risk is reduced; the required rate of return will decrease because more inventors are, risk adverse., The required rte on preferred stock is generally higher than the required return on, common stock., The higher the risk, the higher the required return, other things being equal.,,,10. What is the expected rate of return on a bond that matures in 8 years, has a par value of $1,000, a coupon rate of 12%, and is currently selling for $ 976? Assume annual coupon payments., 12.5%, 14.5%, 12.7%, 14.4 %,,,
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