Question
1- Discount factor is 0.6 and expected price of a bond after a year is 1000$. What is the current price of the bond? 2-A
1-Discount factor is 0.6 and expected price of a bond after a year is 1000$. What is the current price of the bond?
2-A stock promises an expected dividend of 10,500$ after a year and 22,050$ after two years. Interest rate is constant and equals 5%. Calculate present price of stock.3-
3-AssumeY/N=100 andK/N=120 at time t. Calculate K/N at time t+1if savings rate =0.5 and depreciation rate =0.1.4-Assume you are starting a business which will yield profits in the next two years. Profit expected in a year's time is 11,000$, while profit expected in two year's time is 12,100$. Nominal interest rate in all years is the same and equals 10%. Calculate expected present value of future profits.
5-Stock promises a dividend of 500$ after a year and will sell at expected price of 10,000$ after a year. Calculate current price of stock if current one-year interest rate is 5%.
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