1. Suppose today a 10 percent coupon bond sells at par. Two years from now, the required return on the same bond is 8 percent. What is the coupon rate on the bond? What is the YTM on the bond? 2. Vinya Inc. has 7.5 percent coupon bonds on the market that have 10 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 8.75 percent, what is the current bond price? Assume the par value of a bond is $1,000. Do not round intermediate calculations and round your final answer to 2 decimal places. 3. Popie Drink Corp issued 12 year bonds 2 years ago at a coupon rate of 8.4 percent. The bonds make semi-annual payments. If these bonds currently sell for 105 percent of par value, what is the YTM? Assume the par value of a bond is $1,000. Do not round intermediate calculations and round your final answer to 2 decimal places. 4. Treasury bills are currently paying 7 percent and the inflation rate is 3.8 percent. What is the oximate real rate of interest? What is the exact real rate? Round your answer to 2 decimal places. 5. An investment offers a 14 percent total return over the coming year. Tom Jones thinks the total real return on the investment will be only 9 percent. What does Tom believe the inflation rate will be over the next year? Do not round intermediate calculations and round your final answer to 2 decimal places. 6. Stockade Corp. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 11 percent on the company's stock. What is the current stock price? What will the stock be in 3 years? What will the stock be in 15 years? Do not round intermediate calculations and round your final answer to 2 decimal places. 7. Plantoday Inc. will pay a $3.04 per share dividend next year. The company pledges to increase its dividend by 3.8 percent per year indefinitely. If you require a return of 11 percent on your investment how much will you pay for the company's stock today? Round your answer to 2 1. Suppose today a 10 percent coupon bond sells at par. Two years from now, the required return on the same bond is 8 percent. What is the coupon rate on the bond? What is the YTM on the bond? 2. Vinya Inc. has 7.5 percent coupon bonds on the market that have 10 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 8.75 percent, what is the current bond price? Assume the par value of a bond is $1,000. Do not round intermediate calculations and round your final answer to 2 decimal places. 3. Popie Drink Corp issued 12 year bonds 2 years ago at a coupon rate of 8.4 percent. The bonds make semi-annual payments. If these bonds currently sell for 105 percent of par value, what is the YTM? Assume the par value of a bond is $1,000. Do not round intermediate calculations and round your final answer to 2 decimal places. 4. Treasury bills are currently paying 7 percent and the inflation rate is 3.8 percent. What is the oximate real rate of interest? What is the exact real rate? Round your answer to 2 decimal places. 5. An investment offers a 14 percent total return over the coming year. Tom Jones thinks the total real return on the investment will be only 9 percent. What does Tom believe the inflation rate will be over the next year? Do not round intermediate calculations and round your final answer to 2 decimal places. 6. Stockade Corp. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 11 percent on the company's stock. What is the current stock price? What will the stock be in 3 years? What will the stock be in 15 years? Do not round intermediate calculations and round your final answer to 2 decimal places. 7. Plantoday Inc. will pay a $3.04 per share dividend next year. The company pledges to increase its dividend by 3.8 percent per year indefinitely. If you require a return of 11 percent on your investment how much will you pay for the company's stock today? Round your answer to 2
