Chapter 8 Internet Exercises

1. Using the Yahoo! Finance Web site (http://finance.yahoo.com) get the current price and five-year dividend history for Albertsons Inc. To gather this data, enter the ticker symbol (ABS), choose Chart from the drop-down list of quote types, and click the Get Quotes button. At the bottom of the chart, click on the "historical quotes" link. To get a table of previous dividends, select Dividends at the top of the table, set the Start Drive to five years before today's date and click the Get Historical Data button. Click the Download Spreadsheet Format link at the bottom of the table to download a file with this data. Open the .CSV file in Excel. You may find that the dates and dividends are sharing a cell. In this case, select all of the data choose Data Text to Columns from Excel's menu. On the second dialog box, select Space as the delimiter and then click the OK button. You should now have the dividend data in a usable form.
   
   a. Since ABS pays dividends quarterly, calculate the quarterly percentage change in the dividends. Now, calculate the compound quarterly growth rate of the dividends using the GEOMEAN function.
   
   b. Now, annualize the quarterly dividend growth rate.
   
   c. Calculate the intrinsic value of the stock using a 10% required rate of return and the calculated annual growth rate. Use the sum of the most recent four dividends as D0.
   
   d. How does the calculated intrinsic value compare to the actual market price of the stock? Would you purchase the stock at its current price?
   
   
2. Using the Bond Screener at the Yahoo! Finance Web site (http://bonds.yahoo.com/search.html), find a AAA rated corporate bond with at least 12 years to maturity. Click the link to get more detailed information on your chosen bond, and then set up a worksheet to answer the following questions. Note that since we are using corporate bonds, the basis should be set to 0 (30/360).
   
   a. Using the coupon rate, settlement date, maturity date, and the given yield to maturity, calculate the value of the bond using the PRICE function.
   
   b. Using the coupon rate, settlement date, maturity date, and the given price of the bond, calculate the current yield.
   
   c. Using the coupon rate, settlement date, maturity date, and the given price of the bond, calculate the yield to maturity using the YIELD function.