Assignment Problems

1. Han Corporation issues a bond which has a coupon rate of 9.40%, a yield to maturity of 7.75%, a face value of $1,000, and a market price of $990. What is the semiannual interest payment? Round to two decimal places. 

2. A shipping company sold an issue of 14-year $1,000 par bonds to build new ships. The bonds pay 10% interest, compounded semiannually. Today’s required rate of return is 8.50%. How much should these bonds sell for today? Round to two decimal places. 

3. Assume a company has an issue of 30-year $1,000 par value bonds that pay 4.75% interest, compounded annually. Further assume that today’s required rate of return on these bonds is 3.25%. How much would these bonds sell for today? Round to two decimal places. 

4. Atlantis Company issued bonds on January 1, 2006. The bonds had a coupon rate of 6.0%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on January 1, 2024. What is the yield to maturity for these bonds on January 1, 2019 if the market price of the bond on that date is $1,150? Submit your answer as a percentage and round to two decimal places. 

5. A $1,000 par value 8-year bond with a 13 percent coupon rate recently sold for $980. What is the yield to maturity if the bond makes semiannual payments? Submit your answer as a percentage rounded to two decimal places. 

6. Consider a 7 year bond with face value $1,000 that pays an 8.4% coupon semi-annually and has a yield-to-maturity of 6.9%. What is the approximate percentage change in the price of bond if interest rates in the economy are expected to increase by 0.40% per year? Submit your answer as a percentage and round to two decimal places. (Hint: What is the expected price of the bond before and after the change in interest rates?) 

7. Nippon, Inc. expects its current annual $3.30 per share common stock dividend to remain the same for the foreseeable future. What is the intrinsic value of the stock to an investor with a required return of 9.2%? Round to two decimal places. 

8. Hackworth Company’s common stock is expected to pay a $6.10 dividend in the coming year. If investors require an 11% return and the growth rate in dividends is expected to be 7%, what should the market price of the stock be? Round to two decimal places. 

9. Nell Corporation stock is currently selling for $15.50. The stock is expected to pay a dividend of 

$1.75 at the end of the year. Dividends are expected to grow at a constant rate of 6% indefinitely. Compute the expected rate of return on Nell Corporation stock. Submit your answer as a percentage and round to two decimal places. 

10. Finkle-McGraw Corp. just paid a dividend today of $2.60 per share. The dividend is expected to grow at a constant rate of 4.6% per year. If Finkle-McGraw Corp. stock is selling for $72.00 per share, what is the stockholders’ expected rate of return? Submit your answer as a percentage and round to two decimal places.

Instructions:

You are required to use a financial calculator or spreadsheet (Excel) to solve 10 problems related to the risk and return, stocks and bonds valuation. You are required to show the following 3 steps for each problem (sample questions and solutions are provided for guidance): 

(i) Describe and interpret the assumptions related to the problem. 

(ii) Apply the appropriate mathematical model to solve the problem. 

(iii) Calculate the correct solution to the problem. 

Sample Questions and Solutions 

Sample Question # 1: 

A company has an issue of 12-year bonds that pay 5% interest, annually. Further assume that today’s required rate of return on these bonds is 7%. How much would these bonds sell for today? Round off to the nearest $1. 

Solution 

(i) The problem assumes that the face value of the bond is $1000. The bond will pay an annual coupon of 5% i.e., coupon or interest amount of $50 is assumed to paid every year. It also assumes that investors currently required a return of 7% on investments with similar risk characteristics. The use of bond valuation concept is appropriate to calculate the true value of these bonds. The accuracy of the solution depends on the correctness of the assumptions on face value, coupon payments and required rate of return assumption. 

(ii) The use of bond valuation concept which suggests that the true value of a bond is the present value of its future coupon and face value discounted at investors required rate of return is appropriate to calculate the true value of these bonds. We are required to compute the present value (PV) which represents the true value of the bond. 

(iii) FV= $1000; PMT=$50; Rate = 7%; N=12 years; Compute PV = ? $841.15 Value of the Bond = $841.15 

It is important to understand the parts of examining an ethical dilemma before completely analyzing a case. You will be asked directed questions to help you see pertinent aspects of one case. Using a systematic method will allow you to address ethical dilemmas that you encounter in practice.

Fill out the attached table.

 BACKGROUND INFORMATION FOR THE ASSIGNMENT: 

Throughout the semester you have been introduced to a wide range of topics, demonstrating the diverse nature of psychology. You have also been exposed to a variety of philosophical and theoretical perspectives used to examine and explain those topics. Different philosophical and theoretical perspectives make different assumptions about human behavior and mental processing. Consequently, they often seek to understand human behavior by focusing on different aspects of that behavior and/or different causal variables. The purpose of this final assignment is to help you better appreciate the scope of psychology by examining how different philosophical and theoretical perspectives seek to explain a given psychological topic. Doing so will help you understand how psychologists working from different philosophical and theoretical perspectives make different contributions to our understanding of particular psychological topics and how the integration and/or competition between these explanations helps the discipline (at large) advance its understanding of human behavior and mental processing.  

o The text provides 14 faces of resistance. Select three of these types of resistance, and create a brief scenario in which it might occur. From a consultant’s viewpoint, prioritize the scenarios from most difficult to least difficult to handle and state why you think that way. 

o Read about resistance to change in an article titled “The Tower of Babel and the Ralley Driver: Understanding and Negotiating through Resistance to Organizational Change” located  at http://www.regent.edu/acad/global/publications/jpc/vol1iss2/cohen/cohen.htm. 

From the article, there may come a time when it is best to end a project rather than continue to face resistance. Predict what symptoms or signs might be present if it is best to make this choice.

“Justifying Unethical Conduct” Please respond to the following:

1. Unethical conduct is not necessarily illegal conduct; however, the difference between ethical and unethical conduct can be difficult to spot. Using the Internet, identify and post an example within the last three years of when a company engaged in legal, but arguably unethical, conduct and explain. Post information on the case, this can be an article or video. Next, determine two (2) reasons why this conduct could be deemed unethical and why you believe the company failed to make the right decision. Lastly, speculate on the ramifications of the company’s arguably unethical conduct on its customer base. Justify your response.

2. What is an Executive Order and is it binding? How do these Orders affect management decisions in business?