FIN 571 TUTOR Career Path Begins/fin571tutor.com FIN 571 TUTOR Career Path Begins/fin571tutor.com | Page 33

Q-3 (Set 1)
Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon
rate of 5.5 percent paid semiannually and 16 years to maturity. The yield to
maturity of the bond is 5.8 percent.
What is the dollar price of the bond? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
Q-3 (Set 2)
A Japanese company has a bond outstanding that sells for 90 percent of
its ¥100,000 par value. The bond has a coupon rate of 5.7 percent paid
annually and matures in 19 years.
What is the yield to maturity of this bond? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal
places, e.g., 32.16.)
Q-4 (Set 1)
The next dividend payment by ECY, Inc., will be $1.96 per share. The
dividends are anticipated to maintain a growth rate of 4 percent, forever.
The stock currently sells for $39 per share.
What is the dividend yield? (Do not round intermediate calculations and
enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Dividend yield
%
What is the expected capital gains yield? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal
places, e.g., 32.16.)
Capital gains yield
%
Q-4 (Set 2)
4.Schiller Corporation will pay a $3.14 per share dividend next year. The
company pledges to increase its dividend by 5 percent per year,
indefinitely. If you require a return of 12 percent on your investment, how
much will you pay for the company’s stock today? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g.,
32.16.)
5. Siblings, Inc., is expected to maintain a constant 3.6 percent growth rate
in its dividends, indefinitely. The company has a dividend yield of 5.4
percent.
What is the required return on the company's stock? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Required return
%