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1. ABC Inc. has bonds on the market with 15 years to maturity, a YTM of 7% and a a current price of $950. The bond makes semiannual payments. What must the coupon rate be on these bonds?

2. MyFriends is an internet company well enough established for the Board of Directors to approve annual dividend of $2.00 per share.

Given the companies previous performance investors anticipate the Board to increase the dividend at a rate of 5% per year.

The current interest rate is 10%.

If the current market share price is $40 on the stock exchange, would this be a good buy? Why?

Reference no: EM133074853

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