Questions from Financial Markets

Q: Tough times have hit the retail store chain of Brador, Inc

Tough times have hit the retail store chain of Brador, Inc. Analysts expect its dividend of $1.00 a share to fall by 50 percent next year and another 50 percent the following year before it returns to...

Q: JW Corp has a dividend of $0.50. The

JW Corp has a dividend of $0.50. The dividend is expected to grow at a 6% rate over time. Based on the stock’s risk, investors require an 11-percent rate of return. a. Using the constant dividend gro...

Q: A firm’s dividends are expected to grow 20 percent a year for

A firm’s dividends are expected to grow 20 percent a year for the next five years and then trend downward by 3 percent a year until they stabilize at a constant growth rate of 5 percent. The current d...

Q: Assume a $1,000 face value bond has a coupon

Assume a $1,000 face value bond has a coupon rate of 8.5 percent paid semiannually and has an eight-year life. If investors are willing to accept a 10 percent rate of return on bonds of similar qualit...

Q: a. By how much would the value of the bond in

a. By how much would the value of the bond in Problem 4 change if investors wanted an 8-percent rate of return? b. A bond with the same par value and coupon rate as the bond in Problem 4 has 14 years...

Q: The Garcia Company’s bonds have a face value of $1,

The Garcia Company’s bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 16 percent. Assume interest payments are made semiannually. a. Determine the present value o...

Q: Judith, Inc. bonds mature in 8 years and pay a

Judith, Inc. bonds mature in 8 years and pay a semi-annual coupon of $55. The bond’s par value is $1,000. a. What is their current price if the market interest rate for bonds of similar quality is 9.2...

Q: Kamins Corporation has two bond issues outstanding, each with a par

Kamins Corporation has two bond issues outstanding, each with a par value of $1,000. Information about each is listed below. Suppose market interest rates rise 1 percentage point across the yield curv...

Q: Billon Corporation has two bond issues outstanding, each with a par

Billon Corporation has two bond issues outstanding, each with a par value of $1,000. Information about each is listed below. Suppose market interest rates rise 1 percentage point across the yield curv...

Q: You are the president and chief executive officer of a family-

You are the president and chief executive officer of a family-owned manufacturing firm with assets of $45 million. The company articles of incorporation and state laws place no restrictions on the sal...