Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.

Get a Professional Answer

Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.

100% Satisfaction Guarantee

Rate the answer you receive.

Ask SteveS Your Own Question

SteveS, MBA

Category: Homework

Satisfied Customers: 453

Experience: MBA from Top 5 US Business School, Tutoring Experience for Over Two Years

18851589

Type Your Homework Question Here...

SteveS is online now

Problems 1. (Bond valuation) A $1,000 face

Resolved Question:

Problems: 1. (Bond valuation) A $1,000 face value bond has a remaining maturity of 8 years and a required return of 7%. The bond’s coupon rate is 8%. What is the fair value of this bond? 2. (Yield to maturity) Smith Industries has a 8.0% bond maturing in 12 years. What is the yield to maturity if the current market price of the bond is: a. $1,090? b. $1,000? c. $890? 3. (Stock valuation) Suppose GE has non-maturing (perpetual) preferred stock outstanding that pays a $0.50 quarterly dividend and has a required return of 8% APR (2% per quarter). What is the stock worth (price per share)? 4. (Growth rate) Suppose Cisco has a payout ratio of 45% and an expected return on its future investments of 9%. What is Cisco's expected growth rate?

5. (Cumulative growth rate) Jasper Inc has not paid dividends. They are considering paying a common stock dividend of $0.75 per share next year. Analysts indicate the required rate of return is 12% and expect the firm will grow the dividend 5%. What is the value of the firm's stock price (price per share)?

6. (Interest-rate risk) Reliant Energy has many bonds trading on the New York Stock Exchange. Suppose Reliant's bonds have identical coupon rates of 8.5% but that one issue matures in 3 year, one in 9 years, and the third in 12 years. a. If the yield to maturity for all three bonds is 8%, what is the fair price of each bond?

7. (Default risk) You buy a very risky bond that promises a 11% coupon and return of the $1,000 principal in 10 years. You pay only $750 for the bond. a. You receive the coupon payments for four years and the bond defaults. After liquidating the firm, the bondholders receive a distribution of $250 per bond at the end of 4.5 years (last payment includes coupon payment). What is the realized Rte of return on your investment? b. The firm does far better than expected and bondholders receive all of the promised interest and principal payments. What is the realized return on your investment? 8. (Beta and required return) The riskless return is currently 6%, and Jupitaer Co. has estimated the contingent returns given here. a. Calculate the expected returns on the stock market and on Jupiter Co. stock. b. What is Jupiter's beta? c. What is Jupiter's required return according to the CAPM? Realized Return State of the market Probability that state occurs stock mkt Jupiter Stagnant 20% -10% -15% Slow growth 35% 10% 15% average growth 30% 15% 25% rapid growth 15% 25% 35%

Steve I have one request before acceptance. Can you explain the process of how you got the answers? I am using this as a study guide for an upcoming exam so I need to figure out how to master these computations myself.

Sorry for the delay in payment. I logged out and forgot. I am accepting now.

Share this conversation

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.

JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.

Web sites like justanswer.com/legal ...leave nothing to chance.

Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.

Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.

I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.Freshfield, Liverpool, UK

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.GPHesperia, CA

I couldn't be more satisfied! This is the site I will always come to when I need a second opinion.JustinKernersville, NC

Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. EstherWoodstock, NY

Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. RobinElkton, Maryland

He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here.DianeDallas, TX

Meet The Experts:

LogicPro

Engineer

Satisfied Customers:

4598

Expert in Java C++ C C# VB Javascript Design SQL HTML