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Which of the following bonds will be most sensitive to a change in interest rates?,Question 1 options:, A) a ten-year bond with a $2000 face value whose yield to maturity is 5.8% and coupon rate is 5.8% APR paid semiannually, B) a 15-year bond with a $5000 face value whose yield to maturity is 7.4% and coupon rate is 6.2% APR paid annually, C) a 20-year bond with a $3000 face value whose yield to maturity is 6.0% and coupon rate is 5.4% APR paid semiannually, D) a 30-year bond with a $1000 face value whose yield to maturity is 5.5% and coupon rate is 6.4% APR paid annually,,Question 2 (2 points) ,A $1000 bond with a coupon rate of 5.4% paid semiannually has five years to maturity and a yield to maturity of 7.5%. If interest rates rise and the yield to maturity increases to 7.8%, what will happen to the price of the bond?,Question 2 options:, A) fall by $9.82, B) fall by $11.59, C) rise by $12.16, D) The price of the bond will not change.,,Question 3 (2 points) ,A company issues a ten-year bond at par with a coupon rate of 6% paid semi-annually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 7.8%. What was the percentage change in the price of the bond over the past two years?,Question 3 options:, A) 11.81%, B) -43.04%, C) -10.56%, D) 75.55%,,Question 4 (2 points) ,What is the coupon rate of a two-year, $10,000 bond with semiannual coupons and a price of $9543.45, if it has a yield to maturity of 6.8%?,Question 4 options:, A) 4.32%, B) 5.60%, C) 6.25%, D) 8.44%,,Question 5 (2 points) ,A corporate bond which receives a BBB rating from Standard and Poor’s is considered,Question 5 options:, A) a junk bond., B) an investment grade bond., C) a defaulted bond., D) a high-yield bond.,,Question 6 (2 points) ,Spacefood Products will pay a dividend of $2.40 per share this year. It is expected that this dividend will grow by 3% per year each year in the future. What will be the current value of a single share of Spacefood’s stock if the firm’s equity cost of capital is 10%?,Question 6 options:, A) $24.00, B) $23.97, C) $30.22, D) $34.29,,Question 7 (2 points) ,Valence Electronics has 217 million shares outstanding. It expects earnings at the end of the year of $760 million. Valence pays out 40% of its earnings in total?15% paid out as dividends and 25% used to repurchase shares. If Valence’s earnings are expected to grow by 6% per year, these payout rates do not change, and Valence’s equity cost of capital is 8%, what is Valence’s share price?,Question 7 options:, A) $10.51, B) $24.40, C) $56.60, D) $70.05,,Question 8 (2 points) ,JRN Enterprises just announced that it plans to cut its dividend from $2.50 to $1.50 per share and use the extra funds to expand its operations. Prior to this announcement, JRN’s dividends were expected to grow at 4% per year and JRN’s stock was trading at $25.00 per share. With the new expansion, JRN’s dividends are expected to grow at 8% per year indefinitely. Assuming that JRN’s risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to:,Question 8 options:, A) $25.00, B) $15.00, C) $31.25, D) $27.50,,Question 9 (2 points) ,Jumbuck Exploration has a current stock price of $2.00 and is expected to sell for $2.10 in one year’s time, immediately after it pays a dividend of $0.26. Which of the following is closest to Jumbuck Exploration’s equity cost of capital?,Question 9 options:, A) 9%, B) 12%, C) 18%, D) 22%,,Question 10 (2 points) ,Which of the following is NOT a method by which a company can increase its dividend payments?,Question 10 options:, A) It can issue more shares., B) It can increase its earnings., C) It can decrease the number of shares outstanding., D) It can increase its dividend payout rate.