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a ) Four years ago, the Zuri Corporation issued an 8 % coupon ( paid semi - annually ) , 2 0 - year AA
a Four years ago, the Zuri Corporation issued an coupon paid semiannually
year AArated bond at its par value of $
Currently, the yield to maturity on these bonds is
Calculate the price of the bond today
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b Assume that there is a bond on the market priced at $ and that the bond comes with a face value of $a fairly common face value for bonds
On this bond, yearly coupons are $ The coupon rate for the bond is and the bond will reach maturity in years.
Calculate the Yield to Maturity YTM
c The Growing Rapid Company is expected to pay a dividend of $ at the end of this year. Thereafter, the dividends are expected to grow at the rate of per year for
years, and then drop to for year, before settling at the industry average growth rate of indefinitely.
If you require a return of to invest in a stock of this risk level, how much would you be justified in paying for this stock?
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