Multiple choice-Rate of Return, Price of Stock
Not what you're looking for?
I need help figuring out what formulas to use so that I can understand how to compute the rate of return on the following questions. Please help with these multiple choice questions.
What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7% coupon and sells the bond one year later for $1,037.19?
A) 5.00%
B) 5.33%
C) 6.46%
D) 7.00%
What price would you expect to pay for a stock with 13% required rate of return, 4% rate of dividend growth, and an annual dividend of $2.50 which will be paid tomorrow?
A) $27.78
B) $30.28
C) $31.10
D) $31.39
What is the required return for a stock that has a 5% constant growth rate, a price of $25, an expected dividend of $2, and a P/E ratio of 10?
A) 5%
B) 10%
C) 13%
D) 22%
Purchase this Solution
Solution Summary
Answers and Explanations to Multiple choice questions on Rate of Return, Price of Stock, Required return for a stock
Solution Preview
What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7% coupon and sells the bond one year later for $1,037.19?
A) 5.00%
B) 5.33%
C) 6.46%
D) 7.00%
Answer: A) 5.00%
Coupon= $70
Purchase price= $1,054.47
Sale price= $1,037.19
Capital gain (loss)= ($17.28) =1037.19-1054.47
Coupon + Capital gain (loss)= $52.72 =70-17.28
Rate of return= 5.00% =52.72 / ...
Purchase this Solution
Free BrainMass Quizzes
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Introduction to Finance
This quiz test introductory finance topics.
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.