{"id":35588,"date":"2018-02-20T23:50:30","date_gmt":"2018-02-20T23:50:30","guid":{"rendered":"https:\/\/writemyessayfree.com\/managerial-finance-2"},"modified":"2017-08-16T06:33:44","modified_gmt":"2017-08-16T06:33:44","slug":"managerial-finance-2","status":"publish","type":"post","link":"https:\/\/www.benedictsol.com\/blogs\/managerial-finance-2\/","title":{"rendered":"managerial finance"},"content":{"rendered":"<div class=\"the_content_wrapper\">\n<p>managerial finance<\/p>\n<p>A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will<br \/> the price be 5 years from now? (2 points)<\/p>\n<p>2. Kern Corporation\u2019s 5-year bonds yield 7.30% and 5-year T-bonds yield 4.10%. The real risk-free rate is r* = 2.5%, the default risk premium for Kern\u2019s bonds is DRP =<br \/> 1.90% versus zero for T-bonds, the liquidity premium on Kern\u2019s bonds is LP = 1.3%, and the maturity risk premium for all bonds is found with the formula MRP = (t \u2013 1)<br \/> \u00d7 0.1%, where t = number of years to maturity. What is the inflation premium (IP) on all 5-year bonds? (2 points)<\/p>\n<p>3. Central Development Company just paid a dividend of $3.00 per share. The company just entered a very profitable growth mode and expects that its dividend will grow<br \/> 15% annually over the next three years. In the spirit of under promising and over delivering, Central Development has told investors that after the third year it<br \/> expects the annual dividend to grow at a more reasonable rate of 2% per year. Currently, the risk free rate (RRF) is 2.5%, the market risk premium (RPM) is 6.5%, and<br \/> Central\u2019s beta is 1.5.<\/p>\n<p>If you want to buy Central\u2019s stock today, how much are you willing to pay? (3 points)<\/p>\n<p>4. Andrew has decided that given the current economic conditions he wants to have a portfolio with a beta of 0.9, and is considering Stock R with a beta of 1.3 and<br \/> Stock S with a beta of 0.7 as the only 2 candidates for inclusion. If the risk-free rate is 4% and the market risk premium is 7%, what will his portfolio\u2019s expected<br \/> return be and how should he allocate his money among the two stocks? (3 points)<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>managerial finance A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will the price be 5 years from now? (2 <a href=\"https:\/\/www.benedictsol.com\/blogs\/managerial-finance-2\/\" class=\"read-more\">Read More &#8230;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-35588","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/35588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=35588"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/35588\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=35588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=35588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=35588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}