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please show detailed steps and calculations. 1. A bond with 10 years to maturity has a face value of $1,000. The bond pays an 8%

please show detailed steps and calculations.image text in transcribed

1. A bond with 10 years to maturity has a face value of $1,000. The bond pays an 8% semiannual coupon, and the bond has a 9% nominal yield to maturity. a. Draw a timeline showing the expected cash flows to the bondholder. Make sure you clearly identify the period and the associated cash flow. b. What is the current price for this bond? c. Assume two years have passed and the nominal yield to maturity for this bond is/will be 6%. What is/will be the new price for the bond? 2. The Howling Dog Day Care Corp. (HDDC) just paid a dividend of $1.25 per share. The dividend is expected to grow at 30 percent for the next five years and then level off to a 5 percent growth rate indefinitely. The required rate of return on the company's stock is 12 percent. a. Draw a timeline of the expected cash flows to a shareholder assuming they plan to hold the stock for five years. b. How much is a share of HDCC worth in five years (i.e. after the next five dividend payment c. What is the current share price of HDDC? 3. Exon-Mobil (XOM) has had the following year-end prices and dividends: Year XOM, Inc. Price Dividend 2009 76.63 2010 93.69 1.37 2011 79.83 1.55 2012 68.19 1.66 2013 73.12 1.74 2014 84.76 1.85 a. Calculate the holding period return to one decimal place (ie xx.x percent) for each year. Year XOM 2010 2011 2012 2013 2014 b. Calculate the arithmetic average annual return. c. Calculate the variance of the annual returns. d. Calculate the standard deviation of the annual returns. 4. The stock of Ultrasound Communications Company (UCC) is listed for trading on the NYSE Euronext-Paris stock exchange. For the past several weeks, UCC's stock price has remained around 35 per share. Assume that a competitor, Broadband Telephony Company (BTC), announces that it wishes to acquire UCC in an all-cash tender offer for 60 per share. BTC also announces that it is willing to pay this price for all UCC's shares tendered to it under the offer, and BTC says that UCC's managers support the takeover attempt. If the tender offer is successful, a merger will be effected in three months' time, and UCC will cease to exist as a separate company. Thus, its stock will no longer be listed on the exchange. a. What price do you think UCC's stock will sell for immediately after this announcement? Explain. b. Draw a figure illustrating the likely evolution of UCC's stock price over the next three months

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