Canada sold $1.5 Billion of 50-year bonds carrying a 2.75% coupon. If we assume that on April 28th, 2024, the YTM on these bonds has risen to 6%, and given that there is still 40 years before maturity, what price will each $1,000 bond sell for?

A) $1,000.00 B) $765.22 C) $509.24 D) $608.24

We know that the Yield-to-Maturity can always be decomposed into a Coupon Yield (Coupon/P0) plus a capital gain or loss component. Assume that we are referring to the 2.75% coupon, 50-year bond issued by Canada April 28th, 2014. Assume that it is now April 28th, 2024 and the current yield on this bond is 6%. What is the annual Coupon Yield on this bond?

A) 7.0% B) 6.0% C) 6.5% D) 5.40%

The Electric Company is growing quickly, with current annual increases of 20% per year in both sales and net income. To fund its growth, it is reinvesting all of its net income each year in new productive opportunities (payout ratio = 0). Yesterday, the firm reported net income of $2.00 per share. This growth is expected to last for another five years (to the end of year 5 on the timeline), at which time they will have exploited most of the available high growth opportunities. The growth rate in net income will then fall to 5% and the firm will adopt a payout ratio of 50% with the first dividend paid at time period 6. If shareholders require a 15% return to hold the firms shares, how much would you expect each share to sell for today?

A) $12.98 B) $26.20 C) $15.87 D) $14.68