Question

In: Finance

1. A Common stock of General Motors closed at $38.16 today 7/03/19 The company paid $0.40...

1. A Common stock of General Motors closed at $38.16 today 7/03/19 The company paid $0.40 last quarter and the growth rate is expected to be 5.5%. What will be the investor’s price assuming she has a required rate of 9.5%? What would be the yield the yield on the investment based on an annual (4x$0.40) dividend? Would she buy, sell, or hold if she is interested in trading for a profit? Explain fully.

2. AT&T 10-year bonds paying 8% currently sells for 0.96 which is equivalent to $960 in dollar terms.

a. What is the current yield?

b. What is the yield to maturity?

c. What is the investor’s price assuming she is requiring 11% return

d. Would she invest in the bond? WHY?__________________

Solutions

Expert Solution

jeff jeffy answered 1 month ago
Next > < Previous

Related Solutions

explain the stock structure of general motors
explain the stock structure of general motors
General Motors purchased a speculative Call on Household Manufacturing common stock on March 18, 2010, for...
General Motors purchased a speculative Call on Household Manufacturing common stock on March 18, 2010, for $11,692. The Call is on 800 shares at a strike price of $683. It expires on September 30, 2010. The following data is available with respect to the Call: Date Market Price of Household Manufacturing Shares Time Value of Household Manufacturing Option March 18, 2010                                683                           11,692 March 31, 2010                                 761                           10,917 June 30, 2010                                 755                              5,488 September 30, 2010                                 631                                     -   What is...
1)On 1/1/19, Investor paid $200,000 for 10,000 shares (which is 10% ownership) of Gamma common stock....
1)On 1/1/19, Investor paid $200,000 for 10,000 shares (which is 10% ownership) of Gamma common stock. Gamma reported net income of $65,000 for 2019. The fair value of the Gamma stock on 12/31/19 was $27/share. What amount will be reported in Investor’s balance sheet for the investment in Gamma at December 31? 2) Bob had net income of $200,000 and declared preferred dividends of $25,000 during the current year. He began the year with 20,000 common shares outstanding. He issued...
Journalize the following entries to the 2014 General Journal using the following format. 03/1/2014 - Paid...
Journalize the following entries to the 2014 General Journal using the following format. 03/1/2014 - Paid an attorney the amount to the right in order to trademark the brand on Tech Co's new security app. The trademark has an indefinite life. $ 80,000 03/1/2014 - Purchased inventory for the cost to the right - terms 3/10 n/30 $ 1,875,000 03/1/2014 - Issued new bonds for the amount to the right (i.e., this is the amount of cash Tech Co received)....
The common stock of a company is selling today for $53.69. Call options on the company...
The common stock of a company is selling today for $53.69. Call options on the company expiring in 1-month with strike prices of $49 and $56 are selling for $4.80 and $0.36, respectively. How would you form a bull call spread with the two options (state what kind of options you would buy or sell at what strike price to form a call spread)? What is the cost of each spread? If you have $890 on hand, how many spread...
The common stock of a company is selling today for $53.69. Call options on the company...
The common stock of a company is selling today for $53.69. Call options on the company expiring in 1-month with strike prices of $49 and $56 are selling for $4.80 and $0.36, respectively. a. How would you form a bull call spread with the two options (state what kind of options you would buy or sell at what strike price to form a call spread)? What is the cost of each spread? b. If you have $890 on hand, how...
Investment A Common stock: General Motors Position value: $500,000 Average daily log return %: 0% σ...
Investment A Common stock: General Motors Position value: $500,000 Average daily log return %: 0% σ (SD) of daily log return %: 0.88% Confidence Interval: 95% Time period: 10 days 10 days VaR%: 4.47% Investment B Common stock: Exxon Mobil Position value: $10,000,000 Average daily return %: -0.06% σ (SD) of daily return %: 1.61% Confidence Interval: 99% Time period: 5 days 5 days VaR%: 8.28% Which of the two VaR numbers is the higher % of the position value?...
(WACC) A company has common stock, preferred shares, and debt outstanding. As of today, the common...
(WACC) A company has common stock, preferred shares, and debt outstanding. As of today, the common stock is valued at $10 per share, with 2 million shares outstanding. It has a beta of 5, and market return is estimated to be 4% while treasury bills offer 1.5% risk-free rate. The preferred stock is valued at $15 per share, which pays dividend of $2 each year at a constant growth rate of 3%. Preferred stocks have 5 million shares outstanding. Finally,...
(WACC) A company has common stock, preferred shares, and debt outstanding. As of today, the common...
(WACC) A company has common stock, preferred shares, and debt outstanding. As of today, the common stock is valued at $10 per share, with 2 million shares outstanding. It has a beta of 5, and market return is estimated to be 4% while treasury bills offer 1.5% risk-free rate. The preferred stock is valued at $15 per share, which pays dividend of $2 each year at a constant growth rate of 3%. Preferred stocks have 5 million shares outstanding. Finally,...
The preferred stock of General Motors pays an annual dividend of $1 forever. The appropriate discount...
The preferred stock of General Motors pays an annual dividend of $1 forever. The appropriate discount rate is 8% per year. What is the present value of the preferred stock?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT