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QUESTION 29 A 7% bond matures in 12 years. If you require a yield of 8%,...

QUESTION 29

  1. A 7% bond matures in 12 years. If you require a yield of 8%, what is the bond worth?

$855

$1,098

$924

$1,009

none of these

QUESTION 31

  1. A common stock just paid a $4.00 dividend, expected to grow at 3%. If an investor pays $42 for the stock, what is the implied required return?

    9.95%

    11.08%

    10.37%

    12.81%

    none of these
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Answer #1

29

Calculator
Inputs:
FV          1,000.00
PMT                70.00
Rate (I/Y) 8.000%
Term N                12.00
Output:
PV              924.64

Answer is 924

31

Required return = 4*1.03/42 +3%

= 12.81%

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