Question
Can you show formula and steps please 1) A firm pays a current dividend of $5 and is expected to grow this at 20% for
Can you show formula and steps please
1) A firm pays a current dividend of $5 and is expected to grow this at 20% for 1 year, 10% in year 2 after that, and then at 5% per year thereafter. If required return is 10%, what is current price of the stock?
2) You analyze two different 10-year bonds in the market, issued by different companies. You note that bonds from company A have a higher yield-to-maturity (YTM) than company B. Describe generally the factors that affect the value of YTM, and explain which factor or factors are most likely to account for the difference in YTM between company A and company B.
3) A bond has a face value of $1,000, an annual coupon rate of 6.0%, an annual yield to maturity of 5.0%, makes semi-annual coupon payments and has four years to maturity.
a) What is the price of this bond?
b) If the yield-to-maturity is 6% (annual rate) in six months time, what is my holding period return for the first six months?
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