Question 1
1. ABC's last dividend paid was $0.61, its required return is 16%, its growth rate is 7%. What is ABC's expected stock price in 13 years?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.


Question 2
1. The common stock of ABC Industries is valued at $26.8 a share. The company increases their dividend by 6.7 percent annually and expects their next dividend to be $2.02. What is the required rate of return on this stock?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.


Question 3
1. Suppose the exchange rate is $1.2126 per euro. If the euro appreciates by 29% against the dollar, how many euros would a dollar buy tomorrow?
Enter your answer rounded off to FOUR decimal points. Do not enter any currency unit in the answer box.


Question 4
1. You want to create a portfolio as risky as the market. Suppose you invest your money in Stocks A, B, C, and the risk-free asset. What is the weight of Stock C in your portfolio?
Stock Weights(%) Beta
A 25 1.1
B 19 0.6
C ? 1.5
Rf ? ?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.


Question 5
1. The risk-free rate is 4.5%, the market risk premium is 11.4%, and the stock's beta is 1.29. What is the cost of common stock?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.


Question 6
1. The ABC Company has a cost of equity of 14.9 percent, a pre-tax cost of debt of 3.2 percent, and a tax rate of 34 percent. What is the firm's weighted average cost of capital if the weight of debt is 79 percent?
Note: Enter your answer in precentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 7
1. Below is the stock split data for ABC Company:

Stock
splits
31-Dec-90
31-Dec-91 4 for 1
31-Dec-92
31-Dec-93 7 for 2
31-Dec-94
31-Dec-95
31-Dec-96 1.5 for 1
31-Dec-97
31-Dec-98 2 for 1
31-Dec-99


If you bought 5,393 shares in the beginning of 1990 and during the period of 10 years never bought or sold additional shares, how many shares would you have by the end of 1999?
Enter your answer rounded off to two decimal points.


Question 8
1. Based on the following data, calculate the returns for June 2014

Year Month Div Price
2012 May $0.50 $15.06
2012 June $0.60 $19
2012 July $0.70 $22.12

Enter your answer in percentages rounded off to two decimal points.

Question 9
1. If the market value of debt is $34,436, market value of preferred stock is $158,919, and market value of common equity is 96,087, what is the weight of preferred stock?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

 
Question 10
1. Suppose that today's stock price is $59.2. If the required rate on equity is 15.8% and the growth rate is 4.6%, compute the expected dividend (i.e. compute D1)
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 11
1. The ABC Co. has $1,000 face value stock outstanding with a market price of $870.2. The stock pays interest annually, matures in 10 years, and has a yield to maturity of 11.3 percent. What is the annual coupon amount?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points
Question 12
1. You have observed the following returns on ABC's stocks over the last six years:
7.3%, 15.6%, 3.9%, -2.5%, 6.4%, -5.1%
What is the geometric average returns on the stock over this six-year period.
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.


Question 13
1. Suppose the nominal rate is 14.9% and the inflation rate is 6.4%. Solve for the real rate.

Use the Fisher Equation to get your anser.
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 14
1. The spot rate for the pound is £0.6648 = $1 and the spot rate for the Canadian dollar is C$1.2375 = $1. What is the £/C$ cross rate?
Enter your answer rounded off to FOUR decimal points. Do not enter any currency sign in the answer box.

Question 15
1. One year ago, you puchased 83 shares of ABC stock for $20.6 per share. During the year, you received a dividend of $4.8 per share. Today, you sold all your shares for $21.7. What are the percentage return on your investment?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 16
1. You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. One stock has a beta of 1.53. What does the beta of the second stock have to be if you want the portfolio to have a beta of 0.67?
Enter your answer rounded off to two decimal points.


Question 17
1. ABC company's market value of common stock is $200 million, preferred stock is $300 million, and debt is $500 million. Suppose that the cost of equity is 7%, the before-tax cost of debt is 4.1%, cost of preferred stock is 3.4%, and the tax rate is 39%.
Compute the WACC.
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 18
1. ABC Company's last dividend was $3.5. The dividend growth rate is expected to be constant at 7% for 3 years, after which dividends are expected to grow at a rate of 3% forever. The firm's required return (rs) is 16%. What is its current stock price (i.e. solve for Po)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 19
1. You are planning a trip to London and plan on spending 12,616 pounds. How many dollars will this trip cost you in dollars if one U.S. dollar is worth 0.5649 pounds.
Enter your answer rounded off to two decimal points. Do not enter any currency sign in the answer box.


Question 20
1. An investor puts $40,000 in a risk-free asset and $20,000 in the market portfolio. Compute the beta of his portfolio.

0.67

2

0.33

1

0.50
Question 21
1. ABC, Inc. has 6 percent bonds outstanding that mature in 20 years. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $814 each. What is the firm's after-tax cost of debt if the tax rate is 32%?
Enter your answer as a percentage rounded off to two decimal points.