ashworth college BU340 Assignment 8 latest 2016 march
Directions: Be sure to save an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English, spelling and grammar. Sources must be cited in APA format. Your response should be four (4) double-spaced pages; refer to the “.ashworthcollege.edu/access/content/group/33c9c4fe-4222-471d-af96-8a79ed231990/Undergraduate%20Course%20Resources/Assignment%20Format%20-%20New”>Assignment Format” page located on the Course Home page for specific format requirements.
ASSIGNMENT 08
BU340
Financial Management I
Directions: Be sure to save an electronic copy of your
answer before submitting it to Ashworth College for grading. Unless otherwise
stated, answer in complete sentences, and be sure to use correct English, spelling,
and grammar.
Respond to the items below.
Part
A:
Moore Company is about to issue a bond with semiannual coupon payments, a
coupon rate of 8%, and par value of $1,000. The yield-to-maturity for this bond
is 10%.
a. What is the price of the bond if the bond
matures in 5, 10, 15, or 20 years?
b. What do you notice about the price of the
bond in relationship to the maturity of the bond?
Part
B:
The Crescent Corporation just paid a dividend of $2 per share and is expected
to continue paying the same amount each year for the next 4 years. If you have
a required rate of return of 13%, plan to hold the stock for 4 years, and are
confident that it will sell for $30 at the end of 4 years, how much should you
offer to buy it at today?
Part
C:
Use the information inthe following table to answer the
questions below.
State
of Economy
Probability
of State
Return
on A in State
Return
on B in State
Return
on C in State
Boom
.35
0.040
0.210
0.300
Normal
.50
0.040
0.080
0.200
Recession
.15
0.040
-0.010
-0.260
a. What is the expected return of each asset?
b. What is the variance of
each asset?
c. What is the standard
deviation of each asset?
