 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?
 19.27
 13.33
 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?
a7.38
b4.52
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?
a130.44
b120.80
c125.78
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?
a0.25
b0.42
c0.16
5) The BD 2,500 face value bond has a coupon rate of 5%, with interest paid semiannually, and matures in 8 years. If the bond is priced to yield 10%, what is the bond’s value today?
a1,822.64
b1,200.67
c1,568.15
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?
a40%
b25%
c35%