a)Calculate the future value of £1,000 invested at a 7% per annum interest rate with daily compounding for 6 years. b) The ordinary shares of Delta Ltd are quoted at £5.00 cum-dividend. A dividend of 30p is just about to be paid. The company has an annual accounting rate of return of 11%, and each year pays out 28% of its profits after tax as dividends. Calculate the cost of equity using the Dividend Valuation Model (DVM). c) A gilt with a face value of £100 and 2 years to maturity pays a 6% annual coupon. It is quoted at a price of £99.09. What is its yield to maturity (YTM)?
a)Calculate the future value of £1,000 invested at a 7% per annum interest rate with daily compounding for 6 years. b) The ordinary shares of Delta Ltd are quoted at £5.00 cum-dividend. A dividend of 30p is just about to be paid. The company has an annual accounting rate of return of 11%, and each year pays out 28% of its profits after tax as dividends. Calculate the cost of equity using the Dividend Valuation Model (DVM). c) A gilt with a face value of £100 and 2 years to maturity pays a 6% annual coupon. It is quoted at a price of £99.09. What is its yield to maturity (YTM)?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
a)Calculate the
b) The ordinary shares of Delta Ltd are quoted at £5.00 cum-dividend. A dividend of 30p is just about to be paid. The company has an annual accounting
Calculate the
c) A gilt with a face value of £100 and 2 years to maturity pays a 6% annual coupon. It is quoted at a price of £99.09. What is its yield to maturity (YTM)?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education