PQR 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 grow by 4.82 percent per year forever. The next dividend is expected to be $12.40 and paid in one year. What is the expected return for the stock? a. 9.83% (plus or minus 0.03 percentage points) Ob.9.74% (plus or minus 0.03 percentage points) ec 492% (plus or minus 0.03 percentage points) Od. 5.01% (plus or minus 0.03 percentage points) Oe. None of the above is within 0.03 percentage points of the correct answer
PQR 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 grow by 4.82 percent per year forever. The next dividend is expected to be $12.40 and paid in one year. What is the expected return for the stock? a. 9.83% (plus or minus 0.03 percentage points) Ob.9.74% (plus or minus 0.03 percentage points) ec 492% (plus or minus 0.03 percentage points) Od. 5.01% (plus or minus 0.03 percentage points) Oe. None of the above is within 0.03 percentage points of the correct answer
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
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Transcribed Image Text:PQR 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 grow by 4.82 percent per year forever. The next
dividend is expected to be $12.40 and paid in one year. What is the expected return for the stock?
O a. 9.83% (plus or minus 0.03 percentage points)
O b. 9.749% (plus or minus 0.03 percentage points)
Oc. 4.92% (plus or minus 0.03 percentage Roints)
O d. 5.019% (plus or minus 0.03 percentage points)
O e. None of the above is within 0.03 percentage points of the correct answer
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