FINC 331 Quiz 3 With Verified Answers.

FINC 331 Quiz 3 With Verified Answers. Nico Corp issued bonds bearing a coupon rate of 12 percent, pay coupons semiannually, have 3 years remaining to maturity, and are currently priced at $940 per bond. What is the yield to maturity? A. 14.54% B. 13.99% C. 15.25% D. 12.00% - CORRECT ANSWER A. 14.54% PMT=60 (.12*10000)/2 N=6 (3*2) FV=1000 PV=940 ---------- I/Y= 7.2693*2= 14.54 A firm has issued cumulative preferred stock with a $100 par value and a 12 percent annual dividend. For the past two years, the board of directors has decided not to pay a dividend. At the end of the current year, the preferred stockholders must be paid ________ prior to paying the common stockholders. A. $24/share B. $12/share C. $ 0/share D. $36/share - CORRECT ANSWER D. $36/share (.12x100)= 12x3=36 Which of the following typically applies to common stock but not to preferred stock? A. par value B. voting rights C. dividend yield D. legally considered as equity in the firm - CORRECT ANSWER B. voting rights What is the approximate yield to maturity for a $1,000 par value bond selling for $1,120 that matures in 6 years and pays 12 percent interest annually? A. 13.2 percent B. 8.5 percent C. 12.0 percent D. 9.3 percent - CORRECT ANSWER D. 9.3 percent PV= +- 1120 FV=1000 N=6 PMT= 120 ------------- I/Y= 9.30