TVM, Share Price, CAPM Questions

1) What is the holding period return (percentage return on this investment) to an investor who bought 100 shares of Charter Oil nine months ago for $36 a share, received two $50 dividend checks, and sold the stock today at $38 a share?

2) What is the market price of a share of stock for a firm that pays dividends of $1.20 per share, has a P/E of 14, and a dividend payout ratio of 0.4?

3) A firm's current ratio is 1.5, and its quick ratio is 1.0. If its current liabilities are $10,000, what are its inventories?

4) Determine the amount you would be wiling to pay for a $1,000 par value bond paying $80 interest each year (annual) and maturing in 12 years, assuming you wanted to earn a 9% rate of return.

5) Your grandparents put $1,000 into a saving account for you when you were born 30 years ago (one time only not annually). This account has been earning interest at a compound rate of 7%. What is its value today?

6) An insurance company offers you and end of year annuity of $48,000 per year for the next 20 years. They claim your return on the annuity is 9%. What is the most you would be willing to pay today for this annuity (answer is a number of Dollars)?

7) 1st bank offers you a car loan at an annual interest rate of 10% compounded monthly. What effective annual interest rate is the bank charging you?

8) Compute the risk premium (this is part of the required rate of return - I am not looking for the full RRR here) for the stock of Omega Tools if the risk free rate is 6%, the expected market return is 12%, and Omega's stock has a beta of .8.

9) Elephant Company common stock has a beta of 1.2. The risk-free rate is 6% and the expected market rate of return is 12%. Determine the RRR (required rate of return) on the security.

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