50.1K

Verified Solution

Link Copied!

Question 9 4 pts General Motors (GM) issued a 10-year bond 2 years ago with an interest coupon of 4.0% that is paid annually. At maturity in 8 years, a single GM bond will pay out $1,000. If investors currently require a return of 5.0% on bonds with GM's risk profile, what should be the market price the buyer should expect to pay on the bond? (round to nearest $ amount) (Hint: The bonds are paying a rate lower than the expected return of the investors.) $922 $935 $1,116 $1,000 Question 10 4 pts Bumble Company is planning an IPO and management is meeting with their investment bankers to discuss the pricing strategy for this first time offering of the company's shares to the public. Bumble's CFO has spent a lot of time researching the price to earnings per share ratios (P/E Ratios) of several competitor companies, including Match which currently trades between $100 and $125 per share. The P/E ratios of the various publicly traded competitor companies range from 20-25x the next year's forecasted earnings per share. Bumble's Chief Financial Officer is forecasting Bumble's next year's earnings per share will be $2.80. She expects the Investment Bank to discuss a price range for the Bumble IPO of ...? $100-$125 per share $50-$100 per share $80-$96 per share O $56-$70

Answer & Explanation Solved by verified expert

See Answer