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- University of Phoenix GEN200 Foundations For General Education And Professional Success Study Guides and Answers
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- DESCRIPTION FOR THIS STUDY GUIDE:
- FIN 571 Week Two
- Individual Assignment: Text Problem Sets
- $9.00 – Purchase
- $37.00 – Download ALL Weeks 1-6
- CHAPTER 5
- A1. (Bond valuation) A $1,000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bond’s coupon rate is 7.4%. What is the fair value of this bond?
- A10. (Dividend discount model) Assume RHM is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%?
- A12. (Required return for a preferred stock) James River $3.38 preferred is selling for $45.25. The preferred dividend is non-growing. What is the required return on James River preferred stock?
- B16. (Interest-rate risk) Philadelphia Electric has many bonds trading on the New York Stock Exchange. Suppose PhilEl’s bonds have identical coupon rates of 9.125% but that one issue matures in 1 year, one in 7 years, and the third in 15 years. Assume that a coupon payment was made yesterday.
- b. Suppose that the yield to maturity for all of these bonds changed instantaneously to 7%.
- What is the fair price of each bond now?
- c. Suppose that the yield to maturity for all of these bonds changed instantaneously again, this time to 9%. Now what is the fair price of each bond?
- d. Based on the fair prices at the various yields to maturity, is interest-rate risk the same, higher, or lower for longer- versus shorter-maturity bonds?
- B20. (Constant growth model) Medtrans is a profitable firm that is not paying a dividend on its common stock. James Weber, an analyst for A. G. Edwards, believes that Medtrans will begin paying a $1.00 per share dividend in two years and that the dividend will increase 6%
- Bret thinks that Medtrans will begin paying a dividend in four years, that the dividend will be $1.00, and that it will grow at 4% annually. James and Bret agree that the required return for Medtrans is 13%.
- a. What value would James estimate for this firm?
- Now using calc functions from book N=2
- b. What value would Bret assign to the Medtrans stock?
- CHAPTER 7
- C1. (Beta and required return) The riskless return is currently 6%, and Chicago Gear has estimated the contingent returns given here.
- a. Calculate the expected returns on the stock market and on Chicago Gear stock.
- b. What is Chicago Gear’s beta?
- c. What is Chicago Gear’s required return according to the CAPM?
- Etext Solutions Included:
- Chapter 5, A1., A10., A12., B16.
- University of Phoenix
- GEN200 Foundations For General Education And Professional Success Study Guides and Answers
- This general education course is designed to introduce the intentional learner to communication, collaboration, information utilization, critical thinking, problem solving and professional competence and values. The course uses an interdisciplinary approach for the learner to develop personal, academic strategies in order to reach desired goals and achieve academic success.
- Academic Success
- Identify university resources required for student success.
- Develop educational goals.
- Recognize the importance of personal responsibility.
- Demonstrate the key elements of the writing process.
- Collaboration
- Describe methods of collaboration.
- Determine strategies for enhancing team performance.
- Identify strategies for conflict resolution.
- Information Utilization
- Perform research in the University Library.
- Evaluate sources of information for relevancy, reliability, and bias.
- Demonstrate summarizing, paraphrasing, and quoting information from various sources.
- Communication
- Prepare a research paper.
- Prepare a presentation.
- Critical Thinking and Professional Competence
- Examine ethics issues.
- Identify personal bias and emotion.
- Determine the relationship between higher education and professional competence.
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