1. A bond promises to pay $1,000 11 years from today. No interest will be paid on the bonds during the 11 years. If the interest rate is 7%, what is the bond's present value?

2.

Assume we have 2 stocks:

1. stock A with $4 earnings per share (at the end of the year) distributes all earnings as dividend and make no reinvestment.
2. stock B with $4 eanrings per share (at the end of the year) distributes 50% as dividend and return of reinvestment is 30%.

Assume expected return for stock A and stock B are both 20%. Please calculate price of stock A and price of stock B, and what is the price difference?

3. A 20-year maturity coupon bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 20%. When the bond sells at 1500, the YTM is____; When the bond sells at 1000, the YTM is _____; When the bond sells at 800, the YTM is _____.

4. You purchased a 6% annual coupon bond at face value and sold it one year later for $1000. What was your rate of return on this investment if the face value at maturity was $1,000