QUESTION 11
As a risk-averse investor, which type of bond would you prefer to minimize exposure to
interest rate risk?
A. 5-year, 7 percent coupon bonds.
B. 20-year, 6 percent coupon bonds.
C. 20-year, zero coupon bonds.
D. 2-year, 7 percent coupon bonds.
E. 3-year, zero coupon bonds.
QUESTION 12
Find the target share price of XYZ Company five years from now.
Current earnings per share $3.25
Annual earnings growth rate 8.00%
Benchmark PE ratio 23
A. $74.75
B. $80.73
C. $101.70
D. $109.83
E. None of the choices are correct.