11. Bond Pricing. A 30-year-maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 8%. What is the bond’s yield to maturity if the bond is selling for: (LO6-2)a. $900?b. $1,000?c. $1,100?
12. Bond Pricing. The following table shows some data for three zero-coupon bonds. The face value of each bond is $1,000. (LO6-2)
Bond Price Maturity (years) Yield to Maturity
A $300 30 —
B 300 — 8%
C — 10 10
a. What is the yield to maturity of bond A? (Express your answer as a percentage rather than a decimal.)
b. What is the maturity of B?
c. What is the price of C?
13. Pricing Consol Bonds. Perpetual Life Corp. has issued consol bonds with coupon payments of $60. (Consols pay interest forever and never mature. They are perpetuities.) (LO6-2)
a. If the required rate of return on these bonds at the time they were issued was 6%, at what price were they sold to the public?
b. If the required return today is 10%, at what price do the consols sell?
1. Stock Markets. True or false? (LO7-1)
a. The bid price is always greater than the ask price.
b. An investor who wants to sell his stock immediately should enter a limit order.
c. The sale of shares by a large investor is usually termed a “primary offering.”
d. Electronic Communications Network refers to the automated ticker tape on the New York Stock Exchange.
2. Stock Quotes. Go to finance.yahoo.com and get trading quotes for IBM.(LO7-1)
a. What are the latest stock price and market cap?
b. What is the bid-ask spread?
c. What are IBM’s dividend payment and dividend yield?
d. What is IBM’s P/E ratio?
3. Stock Quotes. Here is a small part of the order book for Mesquite Foods:(LO7-1)Bid AskPrice Size Price Size103 100 103.5 200102.5 200 103.8 200101 400 104 300 99.8 300 104.5 400
a. Georgina Sloberg submits a market order to sell 100 shares. What price will she receive?
b. Norman Pilbarra submits a market order to buy 400 shares. What is the maximum price that he will pay?
c. Carlos Ramirez submits a limit bid order at 105. Will it execute immediately?
4. P/E Ratios. Favorita Candy’s stock is expected to earn $2.40 per share this year. Its P/E ratio is 18. What is the stock price? (LO7-1)
5. Dividend Yield. BMM Industries pays a dividend of $2 per quarter. The dividend yield on its stock is reported at 4.8%. What is the stock price? (LO7-1)
14.Constant-Growth Model. Arts and Crafts Inc. will pay a dividend of $5 per share in 1 year. It sells at $50 a share, and firms in the same industry provide an expected rate of return of 14%. What must be the expected growth rate of the company’s dividends? (LO7-2 )