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Number BOK Illustration Header Footer Drop Cap Text Part C Problems (1 points each) Show your work for full credit! 1. You bought a stock ten years ago for $20 and sold it today for $55. What is the annual rate of growth (rate of return) on your investment? Assume no cash dividends. CAGR = (End Value/Beginning Value) 1-1 CAGR${55/20)*1/10-1 CAGR=(275)1/10-1 CAGR=0.80243536624 2. An investment guarantees you a retum of 0.9 percent per month. What is the effective annual rate of return that you are guaranteed? 3. Due to additional financing needs XYZ Corporation wishes to issue new bonds that would have a maturity of 10 years, a par value of $1.000 and pay $35 in interest every six months If investors require 7 percent return on XYZ's bond, how many new bonds must XYZ issue to raise $10,000 000 cash? Page 7 of 13 Words: 54/2195 100N 1:58 PM 6/16/2021 SHIBA Table FICUT POIS Pages LP Art Chart Page Number Box AS Drop Cap Tables Illustrations Header & Footer Text 4. Ted owns a bond which is callable in 25 years. The bond has a 6 percent coupon, pays interest semiannually, has a par value of $1,000, and has a yield to call of 6.3 percent. What is the call premium if the bond currently sells for $1,035.98? Yield to call = {Annual Interest + (Call price-market price)/Years to call}(Call Price+Market Price)/2 0.063= {60+(C-1035.98)/2.5)(C+1035.9892 5. Determine the durations of the following bonds. Assume that coupon payments are made annually (1) A zero-coupon bond with 10 years remaining to maturity, and a 7 percent yield to maturity Page: 8 of 13 Words: 542,195 ca 100% 1:58 PM 6/16/2021 5. Determine the durations of the following bonds. Assume that coupon payments are made annually (1) A zero-coupon bond with 10 years remaining to maturity, anda 7 percent yield to maturity (2) A bond with $1,000 par value and a 6 percent coupon rate, 3 years remaining to maturity, and a 6 percent yield to maturity 6. Beets and Cabbage just paid an annual dividend of $1 20 per share this moming and management announced that future dividends will increase by 2.5 percent annually What is the amount of the expected dividend in year 3? Page 13 Words 02.195 1:58 PM 5/16/2021 TOSHIBA

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