1. What is the price today (in dollars and cents) of a 3-year 10.95% coupon rate bond that returns the par value of $1000 at maturity. Use a required rate of return of 8.50%?

2. You are trying to price two bonds that have the same maturity and par value but different coupon rates and different required rates of return. Both bonds mature in 3 years and have par values of $1000. One bond has a coupon rate of 7% and a required rate of return of 7%. The other bond has a coupon rate of 5% and a required rate of return of 5%. What is the absolute value of the difference between the price of these two bonds?

3. The current stock price of Delta Company is $18.75. At the end of the first year the stock is expected to pay a dividend of $1.80 per share. Also at the end of the first year the stock is expected to be priced at $20.25.