Question

1. Consider a bond having a par value of $1,000, a 10 year life and a 14% coupon rate. If interest is paid semiannually and investors require a 12% rate of return, what is the value of the bond?

   		$1,114.70
   		$1,057.91
   		$921.33
   		$894.06

2.

1. Three years ago, you bought a $1,000 par, 8% bond that had 5 years to maturity for $1025. Today, you sold the bond when it is yielding 9%. What is your annual rate of return for the three year period? All coupon payments are annual.

   		6.51%
   		8.00%
   		8.32%
   		9.00%

3.

1. What is the value of a common stock that just paid a $4.50 dividend, and has a constant growth rate of 4% if the discount rate is 9%?

   		$33.75
   		$47.27
   		$90.00
   		$93.60

Answer 1