Reference no: EM133665

Question :

1. What is the value of a share of preferred stock that pays a $9.50 dividend, suppose k is 12%.

2. A $1,000 corporate bond with 10 years to maturity pays a coupon of 8 percent (semi-annual) and the market required rate of return is a) 7.2% and b) 10%. Determine the current selling price for a) and b)?

3. A $1,000 corporate bond with 20 years to maturity pays a coupon of 7 percent (semi-annual) and the market required rate of return is a) 6.6% b) 13%. Determine the current selling price for a) and b)?

4. The subsequent information refers to a six-month call option on the stock of XYZ, Inc.

• Price of the underlying stock: $50.
• Strike price of the three-month call: $45.
• Market price of the option: $10.

a) Evaluate the intrinsic value of the option?

b) Determine the option's time premium at this price?

5.A U.S. Government bond with a face amount of $10,000 with 8 years to maturity is yielding 3.5%. Determine the current selling price?