Ejercicios de finanzas

Ejercios de finanzas

1) For 2006, Treasury bonds with 5-year maturities offered a return about 8.65%; face value of $1,200; and 7.25% coupon rate.   What would be the present value of this bond?.

The present value of the bond is the present value of the interest and the principal discounted at the offered return of 8.65%.
The annual interest is 1,200 X 7.25% = $87. Interest is an annuity and so the present value would be calculated using the PVIFA table
PV of interest is 87 X PVIFA (5,8.65%) = 87 X 3.9252 = 341.50
The principal amount is $1,200 and is a lump sum. We use the PVIF table to get the PV factor
PV of principal is 1,200 X PVIF (5,8.65%) = 1,200 X 0.6605 = 792.56
The PV of the bond = 341.50 + 792.56 = $1,134.06

2) Mrs. Smith has 20 common stocks from A&T Global Enterprises.   If the A&T Global Enterprises’ board directors believe that the price at the end of the year, these common stocks will rise to $57.80 per common stock and the estimate dividend paid would be $2.15 per common stock, what would be the actual price for each common stock if the expected rate of return is 10.75%?.

The actual price of the stock now will be the present value of the cash flows from the stock.
The cash flows are price of $57.80 at the end of the year and a dividend of $2.15. Total cash flow at the end of the year is $59.95
The discounting rate is the expected return of 10.75%
Price now = PV of 59.95 in year 1 = 59.95/(1+10.75%)^1 = $54.13

3) Simon bought a common stock from Monona Air Cleaners Inc. at $35 per share for January 5, 2006 and he expected that the price per share increase by $8 for December 31, 2006.   If Monona Air Cleaners will pay $1.75 for dividend per share, what would be the expected rate of return of Simon’s shares.

Expected rate of return = (Ending Price – Beginning Price + Dividends)/Beginning Price
= (8 + 1.75)/35 = 27.86%
The price increases by $8 so the difference of ending and beginning price is $8....