Lobo Corp currently pays an annual dividend of $5. Starting next fiscal year, the dividend is expected to increase by 3% a year. If the current interest rate in the market is 6.5% per year, what is the value of Lobos stock today?

$137 $187 $147 $157

You just purchased a 30-year bond with 6% annual coupon, par value of $1000, and 15 years to maturity. The bond makes payments semi-annually and the interest rate in the market is 7.0%. How is the bond trading relatively to par?

Below par At par Above par At a premium