Bond Valuation Questions 1 Celcom Berhad bond has a 15 percent coupon rate and RM1000 face value. Interest is paid semi-annually, and the bond has 25 years to maturity and 12% yield to maturity. (a) What is the bond value if its frequency of compounding is semiannually? (b) What is the bond value if its frequency of compounding is quarterly? (c) A company is contemplating a long-term bond issue. It is debating whether or not to include a call provision. (1) What are the benefits to the company from including a call provision? (ii) What are the costs? (d) What is the effective annual yield on the quarterly coupon bond? Stock Valuation Questions 2 May-bank Berhad is a dividend paying company and it currently pays RM3 as dividend. The dividend is expected to grow at the rate of 30% in the first 3 years and then return to its long-run constant growth rate of 6%. The required rate of return is 13%. (i) What is the value of the stock today? (ii) Identify two limitations of the Constant Growth Model or Gordon Growth Model Stock Valuation Questions 3 CIMB bank Berhad is a dividend paying company and it currently pays RM2 as dividend. The dividend is expected to grow at the rate of 30% in the first 5 years and then return to its long-run constant growth rate of 5%. The required rate of return is 12%. (i) What is the value of the stock today