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Find the price of a bond today (annual payment). Calculate the yield to maturity and yield to call for an annual bond. Calculate the cost of equity...
1. Find the price of a bond today (annual payment).
2. Calculate the yield to maturity and yield to call for an annual bond.
3. Calculate the cost of equity for a corporation using CAPM. Remember, if you are provided with a 6-month Treasury bill rate and a 20year Treasury bond rate, which one would you use in the problem? If you are given the past 5-year market premium and the expected market premium, which one would you use in the problem?
4. You may be provided with the state of the economy model (probability of a boom period, normal period, etc.) and returns for a company based upon these periods. You would be expected to calculate the expected rate of return for the company.
5. Find the coefficient of variation (you would not be asked to calculate standard deviation) and interpret the results.
6. Calculate the price of a stock(intrinsic) given the Gordon model. Be sure you know if you are given the PAST dividend payment (Do)or the expected (future) dividend(D1).
7. Calculate the value of a company using the free cash flow model. Bes sure you know if you are given the PAST free cash flow (FCF0) or the expected (future)free cash flow (FCF1).
8. Calculate the net present value.
9. Calculate WACC (no preferred stock). You may be given the Yield to maturity AND the coupon rate. Know which one to use. You would be given the weights explicitly, the tax rate explicitly. You would be asked to calculate the cost of equity using the CAPM only.
