Problem 7-40, Stormy Weather
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
Complete the table of growth rates, stock prices, and P/E ratios.
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Complete the table of growth rates, stock prices, and P/E ratios.
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At what price must Trend-Line’s stock be selling at? What part is due to assets in place and what part is due to growth opportunities?
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Given the face value, annual coupon, Bond L maturity, Bond S maturity, and three rates… find the value of each bond and why the longer-term bond’s price varies more.
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An investor has two bonds in her portfolio, Bond C and Bond Z… calculate the price of the bonds at each year.
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Given the par value, YTM, new YTM, annual coupon rate, and perpetuity… find the percentage change in price for each bond following a decline in interest rates.
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Compute the realized rate of return for an investor.
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Given the years left to maturity, par value, coupon rate, and current market rates… find the yield to maturity, and if you would buy the bond if you thought that a “fair” market interest rate for such bonds.
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Given the years left to maturity for bonds outstanding, annual coupon rate, issue length, par value, market price, and capital gains yield for the previous year… find the yield to maturity on outstanding bonds, determine the current and capital gains yields, and also the actual realized yields if interest rates change.
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Given the information on the semiannual coupon bond, it’s par value, call price, and selling price… determine the nominal yield to maturity, nominal yield to maturity, current yield, and expected capital gains yield for the coming year, and determine whether the bond is expected to be called.
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You are considering the purchase of an outstanding bond that was issued on January 1. There are lots of dates, years, and numbers were provided.
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