How much money to purchase bond

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1. According to the Wall Street Journal, at the current price of $34.50 per share and trailing twelve month EPS of $2.25 per share, the PE ratio is 15.0 times. This is well above analyst estimated growth rates of 10.0% which corresponds to historic PE ratios. Explain.

2. A bond is currently callable by the corporation at $1,060. The bond matures in 10 years, has a par value of $1,000 and a coupon rate of 12%, and pays interest semi-annually. The current market yield on bonds of the same credit rating is 8%. A rational investor would pay up to how much money to purchase this bond today? Select one: A. $1,000.00 B. $1,060.00 C. $1,271.81 D. $1,670.34.

Reference no: EM131933940

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