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Find how much are willing to pay for one share of stock

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Reference no: EM132592581

Question 1: Calculate the following amounts for these bond scenarios:

a. Compute the bond price quoted at 97

b. Compute the bond price quoted at 116.50 (hint bond prices are quoted as a percentage of par(face value) of the bond)

c. What is the annual coupon for a 5.15% bond?

d. Calculate the price of a Zero Coupon bond that matures in 15 years with a market rate of 5.75%

e. Calculate the rate of a Zero Coupon bond that matures in 15 years with a market price of 48.

Question 2: What is the price of a 6% bond in the following scenarios. The bond has 10 years left to maturity.

  • The current rate of new bonds in the market is 4%
  • Par Annual Coupon $ Rate Term Price (solve for present value)

Is this bond selling at a premium or discount?

The current rate of new bonds in the market is 8%. Par Annual Coupon $ Rate Term Price (solve for present value)

Is this bond selling at a premium or discount?

Question 3: The common stock of Tiffany Fabrics pays an annual dividend of $1.85 a share. The company has promised to maintain a constant dividend even though economic times are difficult. How much are you willing to pay for one share of this stock if you want to earn a 9 percent annual return?

(Hint: Use constant dividend formula to find value of a stock)

Po = Do/R

Dividend

Rate

Reference no: EM132592581

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