1. Kessen Inc.'s bonds mature in 7 years, have a par value of $1,000, and make an annual interest payment of $70. The market interest rate for the bonds is(8.07 what is the band's price? a. $923.22 b. $947.56 c. $969.96 d. $994.21 e. $1,019.06 2. Noncallable bonds that mature in 10 years were recently issued by Sternglass Inc. They have a par value of $1,000 and an annual coupon of 5.5%. If the current market interest rate is 7.0%, at what price should the bonds sell? a. $829.21 b. $850.47 c. $872.28 d. $894.65 e. $917.01 3. A 15-year, $1,000 par value bond has an 8.5% annual coupon. What will the price at a 10% return? a. $839.31 b. $860.83 C. $885.77 d. $904.97 e. $927.60 4. Sommers Co.'s bonds currently sell for $1,080 and have a par value of $1,000. They pay a $10 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,125. What i- yield to maturity (YTM)? a. 8.56% b. 9.10% C. 9.46% d. 9.93% e. 10.43% 5. Curtis Corporation's noncallable bonds currently sell for $1,165. They have a 15-year oual coupon of $95, and a par value of $1,000. What is their yield to maturity? 22. Orwell Building Supplies' last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price? a. $41.58 b. $42.64 c. $43.17 d. $44.80 e. $45.92 23. Barnaby Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $6.50 per share. If the required return on this preferred stock is 7.5%, at what price should the preferred stock sell? a. $94.27 b. $76.95 c. $86.67 d. $72.50 e. $83.38 24. Yemi's preferred stock pays a dividend of $6.00. If the price of the stock is $54.00, what is its effective annual rate of return? a. 8.03% b. 11.11% c. 9.45% d. 10.67% e. 12.00% 25. The inflation rate is expected to be 5% next year, fall to 3% the next year, and 2% thereafter. real risk-free rate r* will remain at 2% and the maturity risk premiums on Treasury securities rise zero on very short-term securities (few days) to .2 percentage points for one-year securities. It by 2 percentage points for each. What would be the interest rate for year 4. a. 4.8% b. 5.8% c. 6.00% d. 5.93% e. 6.4%