1.	XYZ stock currently sells in the market for $8.50/share. It just paid a dividend of $0.30/share, and investors expect that the dividend will grow at a constant rate of 4% per year in the future. What rate of return do investors require on this stock?

2.	A year ago, an investor purchased bonds in General Electric at par. The bond had a coupon of 8% at the date of issue. The bond declined over the course of the year to 94. What is the current yield on the bond?

3.	A year ago, an investor purchased 100 shares of General Electric stock at a price of $20.00/share. The firm has just paid its annual dividend of $1.50. Now the share is priced at $15.75 per share in the market. What is his holding period return on the stock?

4. Consider a $1,000 par value bond issued by AT&T with a maturity date in 20 years and a stated coupon of 8.5%. Suppose another bond of equal risk carries a rate of 7.5%. What is the intrinsic value of the bond? What should it be worth?

5.	Suppose you buy a bond for $1230 with an 11.3% coupon maturing in 7 years. Suppose bond pays quarterly. Whats the bonds yield to maturity?