1. Determine the value of stocks: preferred and common.
2. Estimate the value of stock with high growth, and then estimate the value of stock with constant growth.
3. Determine the components of stock valuation models.
4. Determine the value of bonds paying annual and semiannual interest payments, and determine the yield to maturity of bonds paying annual and semiannual interest payments.

	Introduction to Finance FIN2030
	Week 3, Assignment 2
	Part One: Quantative Exercises
	Stocks	Answers
	1. Stock. What is the value of a stock with a
	a. $2.50 dividend just paid and an 8% required return with 0% growth?
	b. $3 dividend just paid and a 8% required return with 2% growth?
	c. $7 dividend to be paid and a 10% required return with 2% growth?
	2. Stock. What is the required rate of return on a stock with a
	a. $2.50 expected dividend and a $19 price with 6% growth?
	b. $2.75 expected dividend and a $20 price with 8% growth?
	c. $2.50 expected dividend and a $19 price with 9% growth?
	3. Stock. What is the growth rate of the stock with a
	a. $3.00 expected dividend and a $20.60 price with 15% required return?
	b. $2.40 expected dividend and a $25.35 price with 10% required return?
	c. $2 expected dividend and a $8.30 price with 11% required return?
	Bonds
	1. Bond. What is the value of a $1,000 par value bond with annual payments of an
	a. 10% coupon with a maturity of 10 years and a 15% required return?
	b. 8% coupon with a maturity of 10 years and a 8% required return?
	c. 11% semiannual coupon with a maturity of 20 years and a 11% required return?
	d. 8% semiannual coupon with a maturity of 20 years and a 9% required return?
	2. Bond. What is the yield to maturity of a $1000 par value bond with an
	a. 10% annual coupon and 10 years to maturity and a $1,000 price?
	b. 9.5% annual coupon and 20 years to maturity and a $788 price?
	c. 5.0% annual coupon and 8 years to maturity and a $800 price?