1. You intend to purchase a 10-year, $1,000 par value bond that pays interest of $60 every six months. If the yield to maturity is 10%, how much should you be willing to pay for this bond?

2. What is the price of a $5000 par value bond, with a coupon rate of 7.5% (coupon interest paid quarterly), 15 years remaining to maturity and a yield to maturity of 8.25%?

3. XYZ, Inc. has a bond outstanding with a par value of $10,000 that makes monthly coupon payments. The coupon rate is 9 percent and the bond has 24 years remaining to maturity. If the yield to maturity of similar bonds is 9.35 percent, what is the current price of the bond?

4. Clovis Pharmaceuticals, Inc. has issued a convertible note with the following terms: Issue date: April 19, 2018; maturity date: May 1, 2025; coupon rate: 1.25%; conversion price: $76.17 per share. What is the notes conversion ratio?

5. Rank the following bonds in order of descending duration:

BOND	COUPON RATE (%)	TIME TO MATURITY (YRS)	YTM (%)
A	15	20	10
B	15	15	10
C	0	20	10
D	8	20	10
E	15	17	10

6. City 1^st National Bank issued $1000 par, 20-year bonds, with a coupon rate of 6.5% on April 30, 2015. If the bonds are currently selling at $758.18, what is the bonds YTM?

7. A stock is currently selling for $40. The expected dividend is $2. This is a constant growth firm. If investors require a return of 15% on this stock, what do they think the growth rate will be?

8. Calculate the estimated price of the following stock.

Required rate of return: 15%;

Expected dividend next year: $20

Expected constant growth rate of dividends: 10%

9. BLC Industries is expected to pay a dividend of $1.50, and the dividend is expected to grow at a constant rate of 7%. This stock is 15% less risky than the market as a whole. The risk-free rate is 6%, and the equity risk premium for the market is 8%. What is the estimated price of the stock?

10. Your required rate of return is 15%. Z Corp. is currently paying a dividend of $2.55. If the expected constant growth rate is 8%. What is the maximum you should pay for this stock?

11. Percy Grainger & Company currently earns $3.00 per share and the company plans to pay 40% of its after-tax earnings as dividends, currently at $1.20 per share in dividends. It is expected to have a constant growth rate of 7% per year. If the risk-free rate of return is 6%, the market risk premium is 8%, and the beta for this company is 1.0, what is the stock price?

12. Xila-Fone Corp. expects to earn $4.00 per share next year, with an expected payout of 30%. Investors expect the dividend to grow at a constant rate of 8% for the foreseeable future. The risk-free rate is 5%, and the beta that is 10% more volatile than the market as a whole, and the expected return on the market is 14%. What is the estimated price of the stock?

13. Johnsey Industries' current dividend is $2. The average growth rate for the past many years has been steady at 8%, but the consensus of analysts is that the expected growth rate is 6%. k = 16%. The intrinsic value of this stock is:

14. Investor A and investor B both have required rates of return of 12%. They are considering the purchase of XTRA stock, which each views as a constant growth case. Both have estimated the dividend for the next period at $1.00, and both agree that the expected growth rate in dividends will be 6% a year. However, investor A plans to buy the stock and hold it for 10 years, while investor B plans to buy the stock and hold it for ONLY 1 year. Which of the following statements is CORRECT about stock valuation?

a. Investor A should be willing to pay more for this stock than B.

b. Investor B should be willing to pay more for this stock than A.

c. Both investors should be willing to pay the same price for the stock.

d. None of these.

15. Low Labs. last dividend was $1.50. Its current equilibrium stock price is $15.75, and its expected growth rate is a constant 5 percent. If the stockholders' required rate of return is 15 percent, what is the expected dividend yield and expected capital gains yield for the coming year?

a. 0%; 15%

b. 5%; 10%

c. 10%; 5%

d. 15%; 0%

16 A stock has earned $3.54 per share before dividends. They have a DPR of 35%. Similar stocks have P/E ratios of 15.3. What is your expected price target if the company earns $3.97 per share next year?