We are considering purchasing one of the following three stocks. Stock HAL has a market capitalization of
$7 Billion. Pays a relatively high dividend with little increase in earnings, and has a P/E ratio of 11 times (or
11:1). Stock CDE has a market capitalization of $62 Billion but does NOT currently pay a dividend. Stock
CDE has P/E ratio of 39 times (39:1). Stock JKL, a housing industry company, has a market capitalization of
$800 Million and a P/E ratio of 18 times (18:1).
a. Classify these sticks according to their market capitalizations.
b. Which of the three would you classify as a growth stock? Why?
c. Which stock would be most appropriate for an aggressive investor?
d. Which stock would be most appropriate for someone seeking a combination of safety and earnings?
defend your answers (min. 200 words),
A highly rated (AAA) corporate bond with 5 years left until maturity was recently quoted as selling for
103.50. The bond’s par value is $1,000, and its initial interest rate is 6.5%. If the this bond pays interest
every 6 months and it has been 4 months since interest was last paid, how much will you be required to pay
for the bond?
For full credit defend, explain, calculate and reason your answer (min 150 words)
Your friends, TJ and JT are thinking about getting married. What advice would you give them regarding how
much to budget for the engagement ring, wedding, and honeymoon? Explain and defend your rationale to
them.(min 150 words)
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