Question
Answers need to be solved using excel. Please be really detailed so I can understand the homework 1)Suppose a 10-year, $1000 bond with a 11%
Answers need to be solved using excel. Please be really detailed so I can understand the homework
1)Suppose a 10-year, $1000 bond with a 11% coupon rate and semiannual coupons is trading for a price of $1088.92
What is the bond's Yield to Maturity (Expressed as an APR with semiannual compounding)?
If the bond's yield to maturity changes to 9% APR, what will the bond's price be?
2)Suppose a 7-year $1000 bond with a 7.21% coupon rate and semiannual coupons is trading with a yield to maturity of 6.19%
Is the bond currently trading at a discount, at par, or at a premium? (Pick below)
a. At a premium because the yield to maturity is greater than the coupon rate
b. At a premium because the coupon rate is greater than the yield to maturity
c. At par because the coupon rate is equal to the yield to maturity
d. At a discount because the coupon rate is greater than the yield to maturity
If the yield to maturity of the bond rises to 6.94% (APR with semiannual compounding), at what price will the bond trade?
3)Summit Systems will pay a dividend of $1.58 one year from now. If you expect Summit's dividend to grow by 6.4% per year, what is its price per share if its equity cost of capital is 11.1%? (Round off to the nearest cent)
4)Company XYZ has just paid an annual dividend of $1.12. Analysts are predicting dividends to grow by $0.15 per year over the next 5 years. After then, the company's earnings are expected to grow 5.9% per year, and its dividend payout rate will remain constant. If the company's equity cost of capital is 8.3% per year, what price does the dividend-discount model predict the company's stock should sell for today? (Round to 2 decimal places)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started