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What is the value in three years

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Question 1 - Suppose you are looking at two bonds identical in every way except for their coupons and price. Both have 10 years to maturity. The first bond has a 8% annual coupon rate and sells for $850.00. The second has a 11% annual coupon rate. What do you think it would sell for?

Question 2 - ABC Company distributes the next dividend that will be $5.50 per share. Investors require a 18%return on companies. ABC dividend increase by 5% every year. Based on the dividend growth model. What is the value of ABC stock today? What is the value in three years?

Reference no: EM133114180

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