$888 $925 $916 $947 You are 21 years old today. Your grand parents set up a fun

$888 $925 $916 $947 You are 21 years old today. Your grand parents set up a fund that will pay you $25000 per year for 20 years starting on your 65th birthday to supplement your retirement. If the trust can earn 7.5% per year how much will your grand parents need to put in the trust fund today [rounded to the nearest ten dollars]? $ 11370 $ 22.310 $ 5250 $ 17450 If two firms have the same current dividend and the same expected growth rate their stocks must sell at the same current price or else the market will not be in equilibrium. True False True if markets are semi strong form efficient True if investors are risk adverse Kilsheimer Company just paid a dividend of $ 4 per share. Future dividends are expected to grow at a constant rate of 6% per year. What is the value of the stock if the required return is 12 %? $33.33 $40.00 $66.67 $70.67 Investment A has an expected rate of return of 15 % per year while investment B has an expected rate of return of 12 % per year. A rational investor will choose _________. Investment A because of the higher expected return Investment B because a lower return means a lower risk Investment A if A and B are of equal risk Investment A only if the standard deviation of returns for A is higher than the standard deviation of returns for B. What is the yield to maturity of a bond that pays a 5% coupon rate with annual coupon payments has a par value of $1000 matures in 15 years and is currently selling for $769? 2.4% 5.7% 7.6% 9.5 % Which one of the following statements concerning the required rate of return on stocks is true? The higher an investor?s required rate of return the higher the value of the stock. If risk is reduced; the required rate of return will decrease because more inventors are risk adverse. The required rte on preferred stock is generally higher than the required return on common stock. The higher the risk the higher the required return other things being equal Emery Inc. has a beta equal to 1.5 and a required return of 14 % based on the CAPM. If the market risk premium is 8% the risk -free rate of return is __________. 4 % 3% 2% 1.5% What is the expected rate of return on a bond that matures in 8 years has a par value of $1000 a coupon rate of 12% and is currently selling for $ 976? Assume annual coupon payments. 12.5% 14.5% 12.7% 14.4 % Stock A has a beta of 1.2 and a standard deviation of returns of 18%. Stock B has a beta of 1.8 and a standard deviation of returns of 18%. If the market risk premium increases then _________. The required rate of return on Stock B will increase more than the required rate of return on stock A. The required returns on stocks A and B will both increase by the same amount. The required returns on stocks A and B will remain the same The required return on stock A will increase more than the required return on Stock B.