Question
Assume that you wish to purchase a 20-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40. If you
Assume that you wish to purchase a 20-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40. If you require a YTM of 10 percent on this investment, what is the maximum price you would be willing to pay for the bond?
The HiTop Company is expected to pay a dividend of $1.50 next year. The current stock price is $25 per share. You believe that the dividends of HiTop will grow at a rate of 5% per year forever. If the required rate of return for HiTop is 11.25%, then:
You should not buy the stock because you believe that the value of the stock will fall to: $24.00
You should buy the stock because you believe that the value of the stock will fall to: $24.00
You should buy the stock because you believe that the value of the stock will rise to: $25.20
You should not buy the stock because you believe that the value of the stock will rise to:$25.00
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