Reference no: EM132546198

Question 1: A zero-coupon bond with a par value of $1,000 has 15 years to maturity. If the YTM is 6.2%, what is the current price this bond?

Question 2: If the following bonds are identical except for coupon & price, what is the coupon of bond B?

                              Bond A                    Bond B

Face value              $1,000                 $1,000

Semiannual Coupon   $55                         ?

Years to maturity          20                    20

Price                         $1,100.00        $940

Question 3: Your company has a required rate of return 7%. The company has completed a new project that is expected to grow dividends at a rate of 50% the first year and 25% the following year, after which growth should be at a constant rate of 6%. The last dividend paid was $1.00. What is the value per share of your firm's stock?

Question 4: Boomer Products, Inc. manufactures "no-inhale" cigarettes. As their target customers age and pass on, sales of the product are expected to decline. Thus, demographics suggest that earnings and dividends will decline at a rate of 5% annually forever. The firm just paid a dividend of $4; given a required return is 10%, what is the current price of the stock?

Question 5: Bunky's Eats recently paid $1.65 as an annual dividend. Future dividends are projected at $1.68, $1.72, $1.76, and $1.80 over the next four years, respectively. In year 5, the dividend is expected to increase by 2.5 percent annually. What is one share of this stock worth to you if you require an 11 percent rate of return on similar investments?