Question 1 : Suppose you are looking at two bonds identical in every way except for their coupons and price. Both have 10 years to maturity. The first bond has a 8% annual coupon rate and sells for 850.00. The Second has a 11% annual coupon rate. What do you think it would sell for?

Question 2: ABC Company distributes the next dividend that will be $5.50 per share. Investors require a 18% return on companies. ABC company dividend increase by 5% every year. Based on the dividend growth model, what is the value of ABC stock today? What is the value in three years?

A] The next dividend, D1, is given as $5.50,

B] Because they already have the dividend in one year, ** what is the dividend in three years ** what is the price in 3 years