Quiz 2 Chapter 6 & 7 (2%) - Week 6 Attempt review 1 PDF

Preview

Summary

Quiz solution...

Description

9/2/2021

Quiz 2: Chapter 6 & 7 (2%) -- Week 6: Attempt review

>

AF208_202101> Quiz 2: Chapter 6 &a... Started on State

Completed on Time taken Mark Question

Tuesday, 6 April 2021, 10:29 PM Finished Tuesday, 6 April 2021, 10:54 PM 24 mins 57 secs 7.00 out of 10.00 (70%)

1

Correct Mark 1.00 out of 1.00

Latu Ltd just paid a $1.57 dividend and investors expect that dividend to grow by 5% each year forever. If the required rate of return on the stock investment is 14%, what should be the price of the stock today? Select one: A. $17.44 B. $18.32



C. $11.21 D. $25.37

Your answer is correct. The correct answer is: $18.32

Question

2

Correct Mark 1.00 out of 1.00

The required rate of return: Select one: A. is used as the discount rate when valuing an asset's expected cash flows B. is increased when an asset's cash flows are considered to be riskier C. is a fixed rate that remains the same for all investors regardless of changes in the market D. Both (A) and (B)



Your answer is correct. The correct answer is: Both (A) and (B)

https://elearn.usp.ac.fj/mod/quiz/review.php?attempt=123127&cmid=55029

1/6

9/2/2021

Quiz 2: Chapter 6 & 7 (2%) -- Week 6: Attempt review

Question

3

Correct

>

AF208_202101> Quiz 2: Chapter 6 &a...

Assume a zero-coupon bond was issued with a face value of $1 000 000 and net proceeds from the issue were 95% of this amount. If the bond had 10 years to maturity, calculate the approximate before-tax cost of this zero-coupon bond:

Select one: A. 0.51%



B. 5%

C. 12%

D. 5.21%

Your answer is correct. The correct answer is: 0.51%

https://elearn.usp.ac.fj/mod/quiz/review.php?attempt=123127&cmid=55029

2/6

9/2/2021

Quiz 2: Chapter 6 & 7 (2%) -- Week 6: Attempt review

Question

4

Correct

>

AF208_202101> Quiz 2: Chapter 6 &a...

A company’s share price is currently $4.72. Its most recent dividend was 50 cents per share; dividends are expected to grow indefinitely at a rate of 4% pa and the tax rate is 30%. The company’s before-tax cost of retained earnings is:

Select one: A. 14.59%

B. 15.02%

C. 19.74%



19.74%

D. 19.13%

Your answer is correct. The correct answer is: 19.74% 19.74%

Question

5

Correct Mark 1.00 out of 1.00

A bond is trading on the secondary market and will mature in 10 years. The bond has a face value of $1,000 that will be paid at maturity. Further, the bond pays an annual coupon at 9% of face value. What should the trading price be for the bond if investors seek a 12% on their investment? Select one: A. $1,192.53 B. $830.49



C. $508.52 D. $827.95

Your answer is correct. The correct answer is: $830.49

https://elearn.usp.ac.fj/mod/quiz/review.php?attempt=123127&cmid=55029

3/6

9/2/2021

Quiz 2: Chapter 6 & 7 (2%) -- Week 6: Attempt review

Question

6

Correct

>

AF208_202101> Quiz 2: Chapter 6 &a...

What is the value of a 15-year 10% coupon bond with a face value of $1,000. The required rate of return on the bond is 12% and the bond makes semiannual payments. Select one: A. $925.76 B. $1,167.39 C. $862.35



D. $1,000

Your answer is correct. The correct answer is: $862.35

Question

7

Correct Mark 1.00 out of 1.00

The ordinary shares of ABC Company are currently trading at $6. A new share would be made at an offer price of $5.90. Issue costs are expected to be 4% of the proceeds of the issue. The last dividend was $0.60 and the next dividend is due a year from now. The estimated growth rate is 4% p.a. What is ABC Company’s after tax cost of an ordinary share issue is:

Select one: A. 15%



B. 13% C. 16% D. 14%

Your answer is correct. The correct answer is: 15%

https://elearn.usp.ac.fj/mod/quiz/review.php?attempt=123127&cmid=55029

4/6

9/2/2021

Quiz 2: Chapter 6 & 7 (2%) -- Week 6: Attempt review

Question

8

Incorrect

>

AF208_202101> Quiz 2: Chapter 6 &a...

A firm is financed using one-third debt and two-thirds equity. If the cost of debt is 9% pa and the cost of equity 12% pa, the firm’s weighted average cost of capital:

Select one: A.

11.0% pa

B. 11.5% pa

C. 10.0% pa



D. 10.5% pa

Your answer is incorrect. The correct answer is: 11.0% pa

Question

9

Incorrect Mark 0.00 out of 1.00

A bond pays $60 interest payments twice a year. What is the coupon rate for the bond if the par value of the bond is $1,000? Select one: A. 12.00% B. 9.00%



C. 6.00% D. 15.00%

Your answer is incorrect. The correct answer is: 12.00%

https://elearn.usp.ac.fj/mod/quiz/review.php?attempt=123127&cmid=55029

5/6

9/2/2021

Quiz 2: Chapter 6 & 7 (2%) -- Week 6: Attempt review

Question

10

Incorrect

>

AF208_202101> Quiz 2: Chapter 6 &a...

Smith Construction, Inc. just paid a $2.78 dividend. The dividend is expected to grow by 4% each year for the next three years. After that the company will never pay another dividend ever again. If your required return on the stock investment is 10%, what should the stock sell for today? Select one: A. $15.63



B. $46.33 C. $28.91 D. $7.46

Your answer is incorrect. The correct answer is: $7.46

◄ Quiz 1: Chapters 1, 3 & 4 (2%) -- Week 3 ump to... Q i 3 Ch

https://elearn.usp.ac.fj/mod/quiz/review.php?attempt=123127&cmid=55029

t

8 & 9 (2%)

W

k9►

6/6...