Q27. Which of the following statements is true?

O If a bond is selling at a premium to par value then its current yield will be lower than the yield-to-maturity on that bond and the capital gain on that bond will be positive.

O All the provided responses to this question are true.

O Suppose you want to make a quick speculative profit in the bond market, and you are firmly convinced that interest rates will rise. To become rich fast, you should purchase bonds and specifically long-term zero-coupon-rate bonds.

O The principle we always rely upon to determine the value of an asset is the following: The value of an asset is equal to the present value of the future cash flows the asset will generate to its owner.

O All the provided responses to this question are false.

Q29. A stock will pay a dividend per share of U.S.S 1.50 next year (Le., Year 1). U.S.S 1.75 in two years (Le, Year 2), and US.S 2.00 in three years (Le., Year 3). After these three years, dividends per share will grow at the annual rate of 4 percent indefinitely. The required return on this stock is 12 percent. What is the current value of this stock? O $ 22.66 O $31.07 O $ 20.68 O $24.85 O $ 28.11