Mr$.$ C calls his broker to enquire about purchasing a bond of Mr$.$ Z Corporation.

His broker quotes a price of Kwacha $11,800,000.$ Mr$.$ C is concerned that the

bond might be over priced based on the facts involved. The K$\mathrm{.}1000,000$ par value

bonds pays $14\%$ interest, and it has $25$ years to maturity. The current yield to

maturity or Market interest rate on a similar bond is $12\%.($Show your Steps

Clearly$)$

Required

A$.$ compute the market price or value of the bond

B$.$ determine whether the bond is overpriced or not

C$.$ What will be the value of the bonds after five years from now?

$10.$

CM Share Company is a merchandising business organization established very recently.

It is expected to have no dividend for the last two year of operation as it identifies its

market. Assume the most recent dividend paid is $$10$ per share. However, the company$$s

earnings and dividends will grow at an annual constant rate of $12\%.$ If the RRR is $15\%$;

$($Show your Steps Clearly$)$

A$.$ What is the current value of the stock?

B$.$ What will the price be at the end of year one and two

C$.$ What will be your decision if you want to invest in this stock and the stock is

being sold at a price of $$400$