Reference no: EM132666355
Problem 1: What is the yield to maturity on a bond with a 6.5% annual coupon rate and 10 years to maturity if the bond is selling today for $980? Assuming that bond pays semi-annual coupon payment.
Problem 2: What is the maturity date on a bond if it is selling today for $1,225 and it pays an annual coupon rate of 4.5% with the yield to maturity of 5%?
Problem 3: AAA stock will pay a dividend of $0.50 per share. Dividend is expected to grow at a constant rate of 5% each year. If investor requires 7% returns on this stock
a. What are the expected dividends in year 8?
b. What is today stock price?
c. What is the expected stock price 6 years from now?
Problem 2: BBB stock just paid a dividend of $2 per share and dividend is expected to grow at a constant rate of 10% each year. What is today stock price if investor requires 12% returns on this stock?
Problem 5: CCC stock will pay a dividend of $2, $2.8 and $3.2 per share. You expect to sell the stock for $35 at the end of year 3. If investor requires 5% return on this investment, what is today stock price?