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Answer question 4. A, B, C and D.
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- b. A certain company gave out P25 dividend per share for its common stock. Themarket value of the stock is P92. Determine the stock yield ratio.c. A property holdings declared a dividend of P9 per share for the common stock. Ifthe common stock closes at P76, how large is the stock yield ratio on thisinvestment?d. Find the amount of the semi-annual coupon for a P250,000 bond which pays 7%convertible semi-annually for its coupons.An entity has the following information in its balance sheet. Ordinary shares of TZS 50 each TZS 2,500,000 12% Unsecured loan notes 1,000,000 The ordinary shares are currently quoted at TZS 130 each and the loan notes are trading at TZS 72 per shs100 nominal. The ordinary dividend of TZS 15 has just been paid with an expected growth rate of 10%. Corporation tax is currently 30% Required: Calculate the Weighted Average Cost of Capital (WACC) for this entity.The following financial data on the Bond Axiata Berhad are available:Earnings available for common stockholders RM1,600,000 Number of shares of common stock outstanding 800,000 Market Price per share RM40.00 The firm is currently considering whether it should use RM800,000 of its earnings to pay cash dividends of RM1 per share or to repurchase stock at RM42 per share.(a) Estimate the Earnings per share before repurchase (EPS)(b) Find the Price/earnings (P/E) ratio(c) Determine how many shares of stock can the firm repurchase at the RM42-per share price, using the funds that would have gone to pay the cash dividend. (d) Calculate the EPS after the repurchase. Explain your calculations.(e) If the stock still sells at 10 times earnings, what will the market price be after the Repurchase. (f) Examine the pre and post-repurchase earnings per share for the Bond Axiata Berhad(g) Compare and contrast the stockholders’ positions under the dividend and repurchase alternatives. Discuss the tax…
- Consider this example: Shares of Ex Why Zee, Inc. (ticker symbol: XYZ) are currently trading at $6 per share. XYZ plans to issue $6M in short term debt and use the money they borrow to repurchase $6M worth of their own stock. What effect will the debt issuance and share repurchase have on the balance sheet? There isn't enough information to answer this question Assets will increase by $6M Liabilities will decrease by $6M Number of Shares Outstanding will increase by 1 million Equity will decrease by $6M5. You bought a convertible bond issued by Spark Corp which has a conversion ratio of 25 common shares for each $1,000 bond. a. At what stock price per share would you make a profit (“in the money") if you bought the bond at par? b. What would you expect the bond to sell for in the market if the stock trades at $48 per share?The Sweet Melon Corp. has total 100 shares trading on the market at $20 each.The book value of the total equity is $3500.The total market value of debt issurance is $4000.The expected return on total assets is 15% and the expected return on debt is 10%.What is the estimated return on equity? A.17.5% B.25% C.None of the choices D.18.3
- 4. State 2 differences between stocks and bonds. You bought 2000 shares of Canadian Tire at $215 each on 30th September 2021. The Face Value of the share is $10. The company paid a 20% cash dividend and 10% stock dividend in 2021. If you sell all your shares today at $189, calculate your total profit/loss under this scenario. (Please show workings when necessary) (2+3=5)assume that you purchased a $1,000 convertible corporate bond. Also assume the bond can be converted to 28.5 shares of the firm’s stock. What is the dollar value that the stock must reach before investors would consider converting to common stock?3. A property holdings declared a dividend of P9 per share for the common stock. If the common stock closes at P76, how large is the stock yield ratio on this investment? a. 27. 17% c. 11.04% b. 27. 07% d. 11.84% 4. Suppose that a bond has a face value of P100,000 and its maturity date is 10 years from now. The coupon rate is 5% payable semi-annually. Find the fair price of this bond, assuming that the annual market rate is 4%. a. 108,412.43 c. 108,512.43 b. 108,612.43 d. 108,712.43
- The problems below illustrate stocks or bonds. Using the important terms related to stocks and bonds, answer the following problems completely. a. A land developer declared a dividend of P5,000,000 for its common stock. Suppose there are 100,000 shares, how much is the dividend per share? b. Find the amount of semi-annual coupon for a P300,000 bonds which pays 6.5% convertible semi-annually for its coupons. c. A certain company gave out P50 dividend per share for its common stock. The market value of the stock is Pi25. Determine the stock yield ratio. d. What is the current yield of a bond whose face value is P15,000 and pays an annual interest of 6.5% if purchased at face value at P13,500? 1. How can we determine if the problem or scenario involves or illustrates stocks or bonds? 2. What possible problems or questions may we encounter when we are dealing with stocks? How about when we are dealing with bonds? 3. What factors have a great effect on the return of your investments both on…(can you explain how did they solve this: (show full solution and formula) USE THE FOLLOWING INFORMATION FOR THE PROBLEM (1) You decide to sell short 200 shares of XCorp stock at a price of $75. Your margin deposit is 65 percent. Commission on the sale is 1.25%. While you are short, the stock pays a $1.75 per share dividend. Interest on margin debt is 5.25% per year. (1) Suppose at the end of one year XCorp is selling at $90 per share and you cover your short position at this price. What is your rate of return on the investment?(Assume a 1.25% commission on the purchase) -40.64% -25.53% 21% 7% –71.2% Ans: Rate of return = [75-90-0.9375-1.125-1.75- (1-.65)(75)(.0525)]/[(.65)(75)+0.9375] =-40.64% Option aSolve the word problem on Stocks and bonds. (Round amount to the nearest centavo) • RFÓ Distributor bought 18,800 shares of stocks at P1.43 par value with a preferred quarterly dividend rate of 8.5%. How much is the amount of quarterly dividend?