*Farsight Company has purchased a piece of equipment costing


Question Description:

25

*Farsight Company has purchased a piece of equipment costing $150,000. It is expected to generate a fifteen-year stream of benefits amounting to $12,636 per year. Determine the rate of return Farsight expects to earn from this equipment. *Compute the risk premium for the stock of Parsimony Action if the risk-free rate is 4%, the market risk premium is 8%, anD Parsimony’s stock has a beta of 1.8. *What is the yield to maturity for a $1,000 Action Stereo zero coupon bond that matures in 12 years if the bond is selling for $675.00? *Matell Toys, Inc. expects to pay an annual dividend of $0.96 next year. Dividends have been growing at a compound annual rate of 5 percent and are expected to continue growing at that rate. What is the value of a share of stock of Matell to an investor who requires a 12 percent rate of return? *Pace Pace’s common stock sells for $34, and its dividends are expected to grow at a rate of 10 percent annually. If investors in Pace require a return of 15%, what is the expected dividend next year? *The _______ the standard deviation, the _______ the investment. *As David Learner says … when bond prices go up, yields go up! *The difference between the Intrinsic Value and the Market Value of a security is …. (select the most asccurate answer) The semi-strong form of the Efficient Market Hypothesis is based on the expectation that ____________________. *Normally the coupon rates on new bonds *The value of a 15-year bond will change ________ for a given change in the required rate of return than the value of a 5 year bond.

Answer

25