1. Assume, Disney Preferred stocks pays a dividend of $40 each year. If your required return is 16%, what is the maximum you should pay for this stock?

2. Peter Lynchpin wants to sell you an investment contract that pays equal $16,500 amounts at the end of each year for the next 20 years. If you require an effective annual return (EAR) of 8% on this investment, how much will you pay for the contract today?

3. Angel Inc just paid a dividend of $3.50 per share on its stock. The dividends are expected to grow at a constant rate of 3.6% per year. If the required rate of return is 11.6%, what is current price?

4. A bond has 20 years to mature, a face value of $1,000 and pays 7% semi-annual coupons. It sells for $867. You bought the bond this morning. Two hours later, interest went down by 2% and you sold the bond. What is the percentage loss or gain realized by you?

5. Congratulations! You got a job. You plan to make a deposit of 300$ each month into a 401-k account that pays interest at 12% compounded monthly. The firm matches it at 100% and deposits the money annually. How much money do you expect to have in the 401-k account in 15 years?

6. James Corporation has just issued a new series of corporate bonds called Marvel. You buy it today for $1,111. Marvel has a face value of $1,000, matures in 25 years and pays 12% quarterly coupon. You keep the bond for 7 years and sell it to Tony Stark when YTM is 6%. How much profit/loss did you make?