1) Assume we make a valuation of the same bond 5 years from now. Required rate of return did not change. Find the present value of all future payments, including par value, that will be paid to the investor 15 years from now. 2) How the value of the bond will change 5 years from now if the required rate of return change to 16%? 3) How the value of the bond will change 5 years from now if the required rate of return change to 12%? 4) Investor buys the stock for 70 dollars, plans to receive a dividend - 5% of the market value. What is the expected annual return, if dividends are expected to grow annually at 3%? 5) Assume, the stock is sold for $10.50. The dividend just paid is $1 and expected to grow at the rate of 5% annually. What is the required return? What is the dividend yield? What is the capital gains yield? 6)

Two constant growth stocks have the same price, and have the same required rate of return. Which of the following statements is CORRECT?

a. The two stocks must have the same dividend per share.

b. If one stock has a higher dividend yield, it must also have a lower dividend growth rate.

c. If one stock has a higher dividend yield, it must also have a higher dividend growth rate.

d. The two stocks must have the same dividend growth rate.

e. The two stocks must have the same dividend yield. 7) Consider a firm that is expected to generate earnings of $3 per share next year. If the mean ratio of share price to expected earnings of competitors in the same industry is 15, then the valuation of the firms shares is: