MBA 2nd Evening

What is the book value of an asset?

• Cost minus accumulated depreciation.

• Cost minus liabilities.

• Cost minus assets.

• None of them.

What is market value?

• trading price of an asset in the market.

• book value of an asset is called market value.

• expenses of purchasing.

• None of them.

Bond types are like

• Perpetual Bond

  Periodic Bond

• Periodic Bond

  Zero Coupon Bond

• Perpetual Bond

  Non Zero Coupon Bond

  Zero Coupon Bond

• All of them

Bond P has a $1,000 face value and provides an 9% annual coupon.  The appropriate discount rate is 14%.  What is the value of the perpetual bond?

• 650.89

• 642.8571

• 800.00

• 620.00

Bond Z has a $1,000 face value for 30 years.  The appropriate discount rate is 12%.  What is the value of the zero coupon bond?

• 43.00

• 32.00

• 35.00

• 33.3778

Stock CG has an expected dividend growth rate of 10%.  Each share of stock just received an annual $3.24 dividend.  The appropriate discount rate is 15%.  What is the value of the common stock? (Use Constant Model)

• 74.00

• 70.00

• 71.28

• None of them

Stock GP has an expected growth rate of 12% for the first 3 years and 8% thereafter.  Each share of stock just received an annual $3.24 dividend per share.  The appropriate discount rate is 15%.  What is the value of the common stock under this scenario?