Question
. A bond has a coupon rate of 7% and has 5 years until maturity and the yield to maturity is 5%. (4 points) a.
. A bond has a coupon rate of 7% and has 5 years until maturity and the yield to maturity is 5%. (4 points) a. What is the price of the bond? ___________________ (2 points) b. How much annual interest is paid to the bondholder? _____________ (2 points) 2. A zero-coupon bond with a 20-year maturity, has a yield to maturity of 6% and a par value of $100,000? a. What is the price of the bond? ______________. (2 points) 3. If you paid $980 for a 10- year bond that pays $70 a year in interest. a. What is the bonds yield to maturity? __________________________. (2 points) 4. A project has an initial investment of $100,000, an opportunity cost of capital of 6% and the following projected cash flows. Yr. 1 - $35,000 Yr. 2 - $40,000 Yr. 3 - $45,000 a. What is the NPV for this 3-year project? ________________ (2 points) 5. A stock is expected to pay a future annual dividend of $5, and has a growth rate of 2%. The required rate of return is 10%. a. What is the price of the stock? ________________. (2 points)
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