QUESTION 1Renfro Rentals has issued bonds that have a 14% coupon rate payable semiannually. The bonds mature in 6 years have a face value of $1 000 and a yield to maturity of 10%. What is the price of the bonds?$850$1 000$1 400$1 177$1 0862 points QUESTION 2Thatcher Corporation’s bonds will mature in 5 years. The bonds have a face value of $1 000 and an 9% coupon rate paid semiannually. The price of the bonds is $1 050. The bonds are callable in 3 years at a call price of $1 150. What is their yield to call?6.62%8.00%9.00 .33%7.77%2 points QUESTION 3A bond that matures in 5 years sells for $1 250. The bond has a face value of $1 000 and a yield to maturity of 11.5%. The bond pays coupons semiannually. What is the bond’s current yield?14.57 .78%9.11 .59 .50%2 points QUESTION 4A bond trader purchased each of the following bonds at a yield to maturity of 6%. Immediately after she purchased the bonds interest rates fell to 5%. What is the percentage change in the price of the following bond after the decline in interest rates?$100 perpetuity6.75%1.00%7.08 .29 .00%2 points QUESTION 5An investor has two bonds in his portfolio. Each bond matures in 4 years has a face value of $1 000 and has a yield to maturity equal to 8.5%. One bond Bond C pays an annual coupon of 12%; the other bond Bond Z is a zero coupon bond. Assuming that the yield to maturity of each bond remains at 8.5% over the next 4 years what will be the price of Bond Z at the following time periods?At the end of year 2$721.57$1 114.65$832.49$849.46$1 012.792 points QUESTION 6Calculate the stock’s expected return for A stock’s return withs the following distribution:Demand for theProbability of ThisRate of Return If ThisCompany’s ProductsDemand OccurringDemand Occurs (%)Weak0.2-30?low average0.2-10%Average0.316?ove average0.225%Strong0.140%5.80 .40%8.20″.98&.69%2 points QUESTION 7Your retirement fund consists of a $10 000 investment in each of 16 different common stocks. The portfolio’s beta is 1.50. Suppose you sell one of the stocks with a beta of 0.8 for $10 000 and use the proceeds to buy another stock whose beta is 1.6. Calculate your portfolio’s new beta.1.451.251.551.231.602 points QUESTION 8Stock R has a beta of 2.5 Stock S has a beta of 1.25 the expected rate of return on an average stock is 15% and the risk-free rate is 7%. By how much does the required return on the riskier stock exceed that on the less risky stock?7.00 .00 .00 .00%4.50%2 points QUESTION 9Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the average return on the portfolio during this period?Year rArB2009-30.00%-7.50 1063.00″.50 1130.00%-19.50 12-12.00u.00 1337.50 .00P.00%.00 .807.50 .70%2 points QUESTION 10Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. Calculate the standard deviation of returns for each stock for the portfolio.Year rArB2009-30.00%-7.50 1063.00″.50 1130.00%-19.50 12-12.00u.00 1337.50 .006.49 .34%.28′.48$.51%
