FIN3S Final Exam Practice Problems MULTIPLE CHOICE Choose the one alternati ve t
ID: 2584326 • Letter: F
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FIN3S Final Exam Practice Problems MULTIPLE CHOICE Choose the one alternati ve that best completes the statement or answers the question 1) What is t he approximate yield to maturity for a $1,000 par value bond selling for $1,120 that 9.3 percent matures in 6 years and pays 12 percent interest anmually B) 12.0 percent 13.2 percent D) 8.5 pencent 2) What is the of 14 2) current price of a S1.00 par value bond maturing in 12 years with·coupon rate percent, paid semiannually, that has a YTM of 13 percent? A) $604 B) $1,073 9%1,060 D) $1,090 3) Tangshan Industries has issued a bond which has a $1000 par value and a 15 percent anmsa coupon interest rate. The bond will mature in ten years and currently sells for $1,250 Using ths information, the yield to maturity on the Tangshan Industries bond is A) 13.29 percent ),0.79 percent D) 11.39 percent ) 12.19 percent 4) ") The current price of DEF Corporation stock is $26.50 per share. Eamings next year should be $2 per price would What share and it should pay a $1 dividend. The P/E multiple is 15 times on average. you expect for DEF's stock in the future? A) $30.00 D) $15.00 B) $13.50 $26.50 5) 5) At year end, Tangshan China Company balance sheet showed total assets of $60 mifllion, total stock liabilities (including preferred stock) of $45 million, and 1,000,000 shares of common outstanding. If Tangshan could sell its assets for $52.5 million, Tangshan's liquidation value per share of comnnon stock is D) $7.50 A) $75 B) $52.50 $15 anning to purchase the stock of Ted's Sheds Inc. and you expect it to pay a dividend of $3 6 in 2 years, and $6.00 in 3 years. You expect to sell the stock for $100 in 3 years. If 6) You a in 1 year, $4.25 your required return for purchasing the stock is 12 percent, how much would you pay for the stodk today? D) $8152 A) $75.45 B) $85.66 C) $77.24 7) Smith Corporation's common stock is expected to pay a dividend of $3.00 forever and currently sells for $21.42. What is the required rate of retun? D) 14% B) 12% C)10% A) 13% paying dividends beginning 3 years from today. The first dividend will be $3.00 and dividends will grow at 5 percent per year thereafter. Given a required return of 15 percent, what would you pay for the stock today? 8) Daniel Custom Cycles' common stock currently pays no dividends. The company plans to begin D) $25.33 B) $22.68 C)$29.86 A) $18.73Explanation / Answer
4) Curent market price 26.5 Earning per share 2 Dividend per share 1 PE Multiple 15 times PE ratio= Market price/Earning per share 15=Market price/2 Market price 30 $ Answer is A. 6) Year Dividend PVF@12% Present value of dividend 1 3 0.89 2.68 2 4.25 0.80 3.39 3 6 0.71 4.27 100 0.71 71.20 81.54 Value of stock today 81.52 Answer is D. 7) Required rate of return=Dividend/Curent market price 0.140056022 14% answer is D.
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