Question 13

Sovereign Partners wishes to diversify its portfolio by investing in corporate bonds. The bond with a 1,000 face value pays annual coupon at the rate of 6% and matures in 4 years. If the bond currently sells at 85.25%, determine the yield to maturity (YTM) for this bond.

12.01%

14.20%

10.80%

15.79%

Question 14

ABC's shares have the following characteristics:

Current dividend = 5.50;

Dividend growth rate = 5%;

Required rate of return = 12%;

Risk free rate = 4%.

What is most likely to be the value of each share using the dividend discount model?

70.00

78.57

82.50

74.20