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1. You forecast that Mega company will pay dividends of $5 at the end of the 1st year. The dividend will double the second year and continue to grow at an annual rate of 5%. What is the current price of Mega stock when the required (expected) return is 15%
2. Assume that the spot rate on a two year security is 5.5%, while the spot rate on a one year security is 7.25%. Assuming that interest is compounded, use information to find the forward rate on a security with a maturity of one year one year from now.
A.5.5%
B.3.78%
C.4.85%
D.5.00%
E.None of the above
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Suppose the spot and six-month forward rates on the Norwegian krone are Kr6.36 and Kr6.56, respectively. The annual risk-free rate in the United States is 4.5 percent, and the annual risk-free rate in Norway is 7 percent. What would the six-month for..
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