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1) The current zero-coupon yield curve for risk-free bonds is as follows maturity (years) 1 2 3 4 5 YTM (%) 4.95 5.55 5.77 5.93
1) The current zero-coupon yield curve for risk-free bonds is as follows
maturity (years) | 1 | 2 | 3 | 4 | 5 |
YTM (%) | 4.95 | 5.55 | 5.77 | 5.93 | 6.07 |
What is the price per $100 face value of a two-year, zero-coupon, risk-free bond?
2) Assume Evco, Inc. has a current stock price of $51.14 and will pay a $1.85 dividend in one year; its equity cost of capital is 19%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price? $
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