A preferred stock has a par va

  1. A preferred stock has a par value of BHD 40, pays a 5% dividend. The required rate of return is 15%. What is this stock worth to you?
  1. 19.27
  2. 13.33
  3. 7.85

Probability

Asset A (%)

Asset B (%)

Good

0.45

8.00

15.00

Moderate

0.30

4.00

8.00

Poor

0.25

1.50

-5.00

2) Using the data above, what is the variance of asset A?

a-7.38

b-4.52
c- 6.11

3) Consider a firm that just paid a dividend of BD2.50. They plan to increase dividends by 4% in the first three years and 8% in year four per year thereafter. The required rate of return is 10%. What is the value of the stock?

a-130.44

b-120.80

c-125.78

4)

A

B

C

Correlation AB

0.9

Price

15

8

6

Correlation BC

0.7

Return

12%

6%

4%

Correlation AC

0.6

Standard Deviation

0.45

0.24

0.15

Using the data above, what is the portfolio variance?

a-0.25

b-0.42
c-0.16

5) The BD 2,500 face value bond has a coupon rate of 5%, with interest paid semi-annually, and matures in 8 years. If the bond is priced to yield 10%, what is the bond’s value today?

a-1,822.64

b-1,200.67

c-1,568.15

6)

Stock

Cost

Beta

Yearly Income

Value Today

A

20

1.15

2

27

B

45

2

8

40

C

32

1.25

6

45

Using the data above, what is the rate of return for stock C?

a-40%

b-25%

c-35%

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