Part 5, A or B or AB, 14 points, 1 point each Answer 'A' or 'B' or 'A B' for each of the following. Put your answer in the column to the right. 35. Stock A has a PEG of 8. Stock R has a PEG of 12. Which stock should you Shorkt 36. Company A has payout of .60 and Company B hasa pavout of 40. All else equal, which company has the higher dividend? 37. Stock A has a required return of 11% Stock Bhas a required return of 9%. Both stocks have a holding period return of 10%. Which stock should you buy? 38. Stock A has a P-E of 18. Stock B has a P.E of 20. if both stocks have a PEG of 9, which stock most likely has more growth? Bond A sells at par. Bond B sells at a premium. Both bonds have a time to maturity of 10 years and a coupon of 8%. Which bond has more interest rate risk? Bond A has 20 years to maturity and Bond B has 10. If interest rates go up, all else equal, which bond will have the greater price decrease? 39. 40. Bond A has a yield to maturity of 8%. Bond B has a yield to maturity of 9%. All else equal, if interest rates decrease, which bond will have a greater capital gain? 41. Bond A pays an annual coupon of $100. Bond B pays $40 coupon payments semi-annually. All else equal, which bond has the higher duration? Bond A is a discount bond. Bond B is a premium bond. All else equal, if interest rates remain the same, which bond's price is expected to increase over the next year? 42. 43. Bond A is a corporate bond. Bond B is a municipal bond. All else equal, if you are in a very high tax bracket, which bond should you choose? Yield A is a promised yield. Yield B is an expected yield. For a company recently experiencing financial distress, which yield is most likely to be greater? Bond A is callable and Bond B is not. Bond A has a coupon of 8.3% and Bond B has a coupon of 8%. Both bonds are currently selling at par value. If you expect interest rates to rise, which bond should you choose? Bond A is a par bond. Bond B is a discount bond. If interest rates are expected to fall, all else equal, which bond is more likely to be called? Bond A has a coupon rate of 2% and a yield of 3%. Baond B has a coupon rate of 2% and a yield of 1.5%, which one has the higher price? 44. 45. 46. 47. 48. Part 6, Risk Classification, 8 points, 2 point each. Below are 5 news events that occurred on December 14", 2018. Classify each of them as systematic (S) or unsystematic (U) and determine whether the information will cause an: increase (1) or decrease (D) in prices. 1/D S/U 49. North Korea condemns U.S. sanctions, warns denuclearization at risk. XPO To Repurchase Up To $18 In Stock. 50. 51. Yield Curve Inverted for the First Time in Years. New report claims Johnson & Johnson knew of asbestos in products. 52