Question
10-16) Maritza has one share of stock and one bond. The total value of the two...
10-16)
Maritza has one share of stock and one bond. The total value of the two securities is 1,040 dollars. The bond has a YTM of 12.42 percent, a coupon rate of 11.92 percent, and a face value of 1,000 dollars; pays semi-annual coupons with the next one expected in 6 months; and matures in 19 years. The stock pays annual dividends and the next dividend is expected to be 9.8 dollars and paid in one year. The expected return for the stock is 19.68 percent. What is the price of the stock expected to be in 1 year?
Homework Answers
Answer #1
Current Value of Bond is calculated in excel and screen shot provided below:
Current Value of Bond is $963.82
Total Value of Holding = $1,040
So, Value of stock = $1,040 - $963.82
= $76.18
Value of stock is $76.19.
Expected stock price in year 1 = $76.19 × (1 + 19.68%) - $9.80
= $91.17 - $9.80
= $81.37
Expected stock price in year 1 will be $81.37.
Not the answer you're looking for?
Similar Questions
1. Maritza has one share of stock and one bond. The total value of the two...
1. Maritza has one share of stock and one bond. The total value
of the two securities is 1,068 dollars. The bond has a YTM of 12.58
percent, a coupon rate of 11.76 percent, and a face value of 1,000
dollars; pays semi-annual coupons with the next one expected in 6
months; and matures in 13 years. The stock pays annual dividends
and the next dividend is expected to be 6.41 dollars and paid in
one year. The expected return...
Maritza has one share of stock and one bond. The total value of the two securities...
Maritza has one share of stock and one bond. The total value of
the two securities is 1,122 dollars. The bond has a YTM of 12.5
percent, a coupon rate of 11.2 percent, and a face value of 1,000
dollars; pays semi-annual coupons with the next one expected in 6
months; and matures in 15 years. The stock pays annual dividends
and the next dividend is expected to be 8.67 dollars and paid in
one year. The expected return for...
Norma has one share of stock and one bond. The total value of the two securities...
Norma has one share of stock and one bond. The total value of
the two securities is 1,298.97 dollars. The stock pays annual
dividends. The next dividend is expected to be 3.59 dollars and
paid in one year. In two years, the dividend is expected to be 6.58
dollars and the stock is expected to be priced at 124.1 dollars.
The stock has an expected return of 16.6 percent per year. The bond
has a coupon rate of 10.58 percent...
XYZ has one share of stock and one bond. The total value of the two securities...
XYZ has one share of stock and one bond. The total value of the
two securities is $1,100. The bond has a YTM of 16.20 percent, a
coupon rate of 9.60 percent, and a face value of $1,000; pays
semi-annual coupons with the next one expected in 6 months, and
matures in 3 years. The stock pays annual dividends that are
expected to be $12.40 and paid in one year. What is the expected
return for the stock?
a) 9.83%...
Dewey has one share of stock and one bond. The total value of the two securities...
Dewey has one share of stock and one bond. The total value of
the two securities is $1,050. The bond has a YTM of 18.60 percent,
a coupon rate of 12.40 percent, and a face value of $1,000; pays
semi-annual coupons with the next one expected in 6 months; and
matures in 6 years. The stock pays annual dividends that are
expected to grow by 1.73 percent per year forever. The next
dividend is expected to be $18.10 and paid...
Dewey has one share of stock and one bond. The total value of the two securities...
Dewey has one share of stock and one bond. The total value of
the two securities is $1,050. The bond has a YTM of 18.60 percent,
a coupon rate of 12.40 percent, and a face value of $1,000; pays
semi-annual coupons with the next one expected in 6 months; and
matures in 6 years. The stock pays annual dividends that are
expected to grow by 1.73 percent per year forever. The next
dividend is expected to be $18.10 and paid...
XYZ has ine share of stock and one bond. The total value of the teosecurities is...
XYZ
has ine share of stock and one bond. The total value of the
teosecurities is $1,100. The bond has a YTM of 12.60 percent,a
coupon rate of 9.60 percent, and a face value of $1000; pays
semi-annual coupons with the next one expected in 6 months; and
matures in 3 years. The stock pays annual dividends that are
expected to grow by 4.82 percent per year forever. The next
dividend is expected to be $13.40 and paid in one...
Court has one share of stock and one bond. The total value of the two securities...
Court has one share of stock and one bond. The total value of
the two securities is 1,376 dollars. The bond has a YTM of 8.9
percent, a coupon rate of 11.64 percent, and a face value of 1,000
dollars. The bond matures in 13 years and pays annual coupons with
the next one expected in 1 year. The stock is expected to pay an
annual dividend every year forever, the next dividend is expected
to be 10.91 dollars in...
Norma has one share of stock and one bond. The total value of the two securities...
Norma has one share of stock and one bond. The total value of
the two securities is 1,321.7 dollars. The stock pays annual
dividends. The next dividend is expected to be 4.55 dollars and
paid in one year. In two years, the dividend is expected to be 8.18
dollars and the stock is expected to be priced at 102.07 dollars.
The stock has an expected return of 14 percent per year. The bond
has a coupon rate of 10.9 percent...
1. Castor owns one bond A and one bond B. The total value of these two...
1. Castor owns one bond A and one bond B. The total value of
these two bonds is 2,593.9 dollars. Bond A pays semi-annual
coupons, matures in 14 years, has a face value of 1,000 dollars,
and pays its next coupon in 6 months. Bond B pays annual coupons,
matures in 15 years, has a face value of 1,000 dollars, has a
yield-to-maturity of 4.98 percent, and pays its next coupon in one
year. Both bonds have a coupon rate...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 28 minutes ago
asked 41 minutes ago
asked 45 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 2 hours ago
asked 2 hours ago
asked 2 hours ago