1. a)

HSB Enterprises issued a bond that pays semi-annual coupon payments, has a $1,000 face value and matures in 16 years. The bond has an annual 9.72 percent coupon with a yield to maturity of 8.24 percent. What is the current price of the bond?

b)

Last year, Big Blue Company issued a dividend of $6 and plans to pay that same amount as a dividend each year. Assuming a discount rate of 6.4%, what is the current price of Big Blue Company stock?