1.Happy Valley Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.1%, face value of $1000 and a current price of $1,038. The bonds make semiannual payments.

What must the coupon rate be on these bonds?

2.An investment offers a 10% total (nominal) return over the coming year. Bill Morneau thinks the total real return on this investment will be only 6%.

What does Morneau believe the inflation rate will be over the next year?

3.Torbay Corporation will pay a $3.40 per share dividend next year. The company pledges to increase its dividend by 4.5% per year indefinitely. If you require an 11% return on your investment, how much will you pay for the company's stock today?

4.

Duffs Co. is growing quickly. Dividends are expected to grow at a 24% rate for the next three years, with the growth rate falling off to a constant 6% thereafter. If the required return is 11% and the company just paid a $1.90 dividend, what is the current share price?

5.

Glenhill Co. is expected to maintain a constant 6.6% growth rate in its dividends indefinitely. If the company has a dividend yield of 8.4%, what is the required return on the company's stock?