Compute each stocks average return and standard deviation

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Financial Data Sets:

1. Compute Bond Price Compute the price of a 3.8 percent coupon bond with 15 years left to maturity and a market interest rate of 6.8 percent. (Assume interest payments are semiannual.) Is this a discount or premium bond?

2. Compute Bond Price Compute the price of a 5.6 percent coupon bond with ten years left to maturity and a market interest rate of 7.0 percent. (Assume interest payments are semiannual.) Is this a discount or premium bond?

3. Value a Constant Growth Stock Financial analysts forecast Safeco Corp.'s (SAF) growth rate for the future to be 8 percent. Safeco's recent dividend was $0.88. What is the value of Safeco stock when the required return is 12 percent?

4. Expected ReturnEcolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent rate. At a current stock price of $44.12, what is the return shareholders are expecting?

5. Risk, Return, and Their Relationship Consider the following annual returns of Estee Lauder and Lowe's Companies:

 

Estee Lauder

Lowe's Companies

Year 1

29.4

-6.0 %

Year 2

-26.0

16.1

Year 3

17.6

4.2

Year 4

49.9

48.0

Year 5

-16.8

-19.0

Compute each stock's average return, standard deviation, and coefficient of variation. Which stock appears better? Why?

Reference no: EM131339923

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