Questions from General Finance


Q: Flora Co.’s bonds, maturing in 7 years, pay

Flora Co.’s bonds, maturing in 7 years, pay 4 percent interest on a $1,000 face value. However, interest is paid semiannually. If your required rate of return is 5 percent, what is the value of the bo...

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Q: You own a 20-year, $1,000 par

You own a 20-year, $1,000 par value bond paying 7 percent interest annually. The market price of the bond is $875, and your required rate of return is 10 percent. a. Compute the bond’s expected rate o...

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Q: Hamilton, Inc. bonds have a 6 percent coupon rate.

Hamilton, Inc. bonds have a 6 percent coupon rate. The interest is paid semiannually, and the bonds mature in 8 years. Their par value is $1,000. If your required rate of return is 4 percent, what is...

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Q: Mason, Inc. has two bond issues outstanding, called Series

Mason, Inc. has two bond issues outstanding, called Series A and Series B both paying the same annual interest of $55. Series A has a maturity of 12 years, whereas Series B has a maturity of 1 year. a...

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Q: National Steel’s 15-year, $1,000 par value

National Steel’s 15-year, $1,000 par value bonds pay 5.5 percent interest annually. The market price of the bonds is $1,085, and your required rate of return is 7 percent. a. Compute the bond’s expect...

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Q: Dalton Inc., has an 11.5 percent return on equity

Dalton Inc., has an 11.5 percent return on equity and retains 55 percent of its earnings for reinvestment purposes. It recently paid a dividend of $3.25 and the stock is currently selling for $40. a....

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Q: The common stock of NCP paid $1.32 in dividends

The common stock of NCP paid $1.32 in dividends last year. Dividends are expected to grow at an 8 percent annual rate for an indefinite number of years. a. If NCP’s current market price is $23.50 per...

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Q: You own 250 shares of Dalton Resources’ preferred stock, which currently

You own 250 shares of Dalton Resources’ preferred stock, which currently sells for $38.50 per share and pays annual dividends of $3.25 per share. a. What is your expected return? b. If you require an...

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Q: In the introduction to the chapter we learned that Apple Computer (

In the introduction to the chapter we learned that Apple Computer (AAPL) recently reinstated the payment of cash dividends, which had been suspended since the 1990s. What are some reasons that might h...

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Q: You are planning to purchase 100 shares of preferred stock and must

You are planning to purchase 100 shares of preferred stock and must choose between Stock A and Stock B. Stock A pays an annual dividend of $4.50 and is currently selling for $35. Stock B pays an annua...

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