Stock valuation and bond valuation

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Stock Valuation. Assume the going interest rate in the market is 7%. There is a stock for sale by a company which, based on its past behavior, is expected to pay an annual dividend of $20. Based on the discussion in class, what would be an estimated price of this stock? Show work.

Bond Valuation. Consider this bond offered by the Government of the Russian Federation: the Face Value of the bond is $1,000, its maturity is 4 years from today, the coupon rate is 5%, and the coupons are paid annually. Assuming the market interest rate is 8%, what is the present value of this bond? Show work.

Reference no: EM132070237

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