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What is the price of the bond

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Question -

(a) A bond has 6.5 years to go to maturity. The coupon rate on the bond is 9.45%, and the yield to maturity is 8.24%. What is the price of the bond?

(b) A company has a beta of 0.75. The risk-free rate is 4.65% and the market risk premium is 7.80%. The company is expected to pay annual dividends. The first dividend is expected to be paid in 4 years and is expected to be $1.30. The dividend in year 5 is expected to be $2.30, and then the dividend is expected to grow 1.5% annually thereafter. What should the price of the stock be?

Reference no: EM133088567

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