Chap 5 bond valuation - Đề cương ôn tập cuối học phần | Đại học Hoa Sen

Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe CHAPTER5 BOND VALUATION
1. Valuing Bonds What is the price of a 15-year, zero coupon bond paying $1,000 atmaturity, assuming
semiannual compounding, if the YTM is: a. 6 percent? b. 8 percent? c. 10 percent?
2. Valuing Bonds Microhard has issued a bond with the following characteristics: Par: $1,000 Time to maturity: 20 years Coupon rate: 7 percent Semiannual payments
Calculate the price of this bond if the YTM is: a. 7 percent b. 9 percent c. 5 percent
3. Bond Yields Watters Umbrella Corp. issued 15-year bonds 2 years ago at a coupon rateof 5.9 percent.
The bonds make semiannual payments. If these bonds currently sell for105 percent of par value, what is the YTM?
Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe
4. Bond Yields A Japanese company has a bond outstanding that sells for 106 percentof its ¥100,000 par
value. The bond has a coupon rate of 2.8 percent paid annually andmatures in 21 years. What is the yield to maturity of this bond?
5. Zero Coupon Bonds You find a zero coupon bond with a par value of $10,000 and17 years to maturity. If
the yield to maturity on this bond is 4.9 percent, what is the dollarprice of the bond?Assume semiannual compounding periods.
6. Valuing Bonds Yan Yan Corp. has a $2,000 par value bond outstanding with a couponrate of 4.9 percent
paid semiannually and 13 years to maturity. The yield to maturity ofthe bond is 3.8 percent. What is the dollar price of the bond?
Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe
7. Valuing Bonds Union Local School District has bonds outstanding with a couponrate of 3.7 percent paid
semiannually and 16 years to maturity. The yield to maturityon these bonds is 3.9 percent, and the bonds
have a par value of $5,000. What is thedollar price of the bond?
8. Zero Coupon Bonds You buy a zero coupon bond at the beginning of the year that has a face value of
$1,000, a YTM of 6.3 percent, and 25 years to maturity. If you hold the bond for the entire year, how much
in interest income will you have to declare on your tax return? Assume semiannual compounding.
Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe
9. Bond Yields Hacker Software has 6.2 percent coupon bonds on the market with9 years to maturity. The
bonds make semiannual payments and currently sell for104 percent of par. What is the current yield on
the bonds? The YTM? The effectiveannual yield?
10. Bond Yields RAK Co. wants to issue new 20-year bonds for some much-needed expansion projects. The
company currently has 6.4 percent coupon bonds on the market that sell for $1,063, make semiannual
payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?
11. Finding the Bond Maturity Erna Corp. has 9 percent coupon bonds making annual payments with a
YTM of 7.81 percent. The current yield on these bonds is 8.42 percent.How many years do these bonds have left until they mature?
Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe
12. Finding the Maturity You’ve just found a 10 percent coupon bond on the market that sells for par
value. What is the maturity on this bond?
13. Zero Coupon Bonds Suppose your company needs to raise $50 million and you want to issue 30-year
bonds for this purpose. Assume the required return on your bond issue will be 6 percent, and you’re
evaluating two issue alternatives: A semiannual coupon bond with a 6 percent coupon rate and a zero
coupon bond. Your company’s tax rate is 35 percent.
a. How many of the coupon bonds would you need to issue to raise the $50 million? How many of the
zeroes would you need to issue?
b. In 30 years, what will your company’s repayment be if you issue the coupon bonds?What if you issue the zeroes?
c. Based on your answers in (a) and (b), why would you ever want to issue the zeroes?To answer, calculate
the firm’s aftertax cash outflows for the first year under the twodifferentscenarios. Assume the IRS
amortization rules apply for the zero coupon bonds.
Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe
14. Valuing Bonds The Frush Corporation has two different bonds currently outstanding.Bond M has a face
value of $30,000 and matures in 20 years. The bond makes no paymentsfor the first six years, then pays
$800 every six months over the subsequent eight years, andfinally pays $1,000 every six months over the
last six years. Bond N also has a face value of$30,000 and a maturity of 20 years; it makes no coupon
payments over the life of the bond.If the required return on both these bonds is 6.4 percent compounded
semiannually, what isthe current price of Bond M? Of Bond N?
Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe CHAPTER 6 STOCK VALUATION
1. Stock Values The next dividend payment by ECY, Inc., will be $2.90 per share. Thedividends are
anticipated to maintain a growth rate of 5.5 percent, forever. If the stock currently sells for $53.10 per
share, what is the required return?
2. Stock Values For the company in the previous problem, what is the dividend yield?What is the expected capital gains yield?
3. Stock Values Shiller Corporation will pay a $2.75 per share dividend next year.The company pledges to
increase its dividend by 5 percent per year, indefinitely. Ifyou require a return of 11 percent on your
investment, how much will you pay for thecompany’s stock today?
Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe
4. Stock Valuation Suppose you know that a company’s stock currently sells for $67 per share and the
required return on the stock is 10.8 percent. You also know that the total return on the stock is evenly
divided between a capital gains yield and a dividend yield. If it’s the company’s policy to always maintain a
constant growth rate in its dividends, what is the current dividend per share?
5. Growth Rate The newspaper reported last week that Bennington Enterprises earned$29 million this
year. The report also stated that the firm’s return on equity is 17 percent.Bennington retains 80 percent of
its earnings. What is the firm’s earnings growth rate? What will next year’s earnings be?
Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe
6. Stock Valuation Universal Laser, Inc., just paid a dividend of $2.90 on its stock. The growth rate in
dividends is expected to be a constant 6 percent per year, indefinitely. Investors require a 15 percent
return on the stock for the first three years, a 13 percent return for the next three years, and then an 11
percent return thereafter. What is the current share price for the stock?
7. Nonconstant Growth Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on
the stock over the next nine years, because the firm needs top low back its earnings to fuel growth. The
company will pay a dividend of $17.50 per share in 10 years and will increase the dividend by 5.5 percent
per year thereafter. If the required return on this stock is 12 percent, what is the current share price?
Concept Questions and Exercises
CORPORATE FINANCE 11e by Ross, Westerfield, Jaffe
8. Nonconstant Dividends Bucksnort, Inc., has an odd dividend policy. The company has just paid a
dividend of $9 per share and has announced that it will increase the dividend by $4 per share for each of
the next five years, and then never pay another dividend. If you require a return of 12 percent on the
company’s stock, how much will you pay for a share today?
9. Differential Growth Synovec Corp. is experiencing rapid growth. Dividends are expected to grow at 30
percent per year during the next three years, 18 percent over the following year, and then 8 percent per
year indefinitely. The required return on this stock is 11 percent, and the stock currently sells for $65 per
share. What is the projected dividend for the coming year?