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ACF 103 - Fundamentals of Finance Tutorial 4 - Questions: Homework Problem

The document contains 9 questions about finance fundamentals from Chapter 4 of an ACF 103 textbook. The questions cover topics like calculating bond prices, stock prices, dividend growth rates, and bond coupon rates.

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Riri Fahrani
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21 views1 page

ACF 103 - Fundamentals of Finance Tutorial 4 - Questions: Homework Problem

The document contains 9 questions about finance fundamentals from Chapter 4 of an ACF 103 textbook. The questions cover topics like calculating bond prices, stock prices, dividend growth rates, and bond coupon rates.

Uploaded by

Riri Fahrani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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ACF 103 – Fundamentals of Finance

Tutorial 4 - Questions
Chapter 4
1. How much should you pay for a zero-coupon bond with a 15-year maturity
and $1,000 face value if you want an 11% return?

2. NDV Corp.'s common stock is expected to pay a $2 dividend, which will grow
at a compound rate of 4% indefinitely.
a. If the market requires a 14% return, what should be the current market
price of the stock?
b. If the current market price of the stock is $40, what rate of return is the
market requiring?

3. The stock of Macbeth Cleaning Corp. is currently selling for $25 a share. The
company is expected to pay a dividend of $0.75 at the end of this year. If you
bought Macbeth stock today and sold it for $29 after receiving the dividend,
what rate of return would you earn?

4. You have just paid $1,063.65 for a bond with nine years remaining to
maturity. Interest on the bond is paid semiannually. If the current rate of return
for similar investments is a nominal 8%, what is this bond's coupon rate?
Round your answers to two decimal places.

5. Text book Ch 4 question # 1 (p.91)

6. Text book Ch 4 question # 2 (p.91)

Homework problem
7. Text book Ch 4 question # 5 (p.91)

8. Text book Ch 4 question # 6 (p.91)

9. Text book Ch 4 question # 9 (p.92)

ACF 103 HAUT 2015 1

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