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Question 2. Solve following questions. (30 points) (1) Find out values of following bonds. YTM is 7%, and Time to maturity is 10 years (10
Question 2. Solve following questions. (30 points) (1) Find out values of following bonds. YTM is 7%, and Time to maturity is 10 years (10 points) Bond A: 3.5% of coupon paid semiannually, Face value = $1,000,000 Bond B: 0% of coupon, Face value = $5,000,000 Bond C: 10% of coupon paid annually, Face value = $3,500,000 (2) Find out values of following stocks. The discount rate is 8% (10 points) Stock A: recently paid dividend = $ 3 per share, dividend growth rate as 0% Stock B: recently paid dividend = $ 6 per share, dividend growth rate as 4% Stock C: EPS = $ 15, benchmark PER = 3 (3) Firm A has recently paid dividend of$ 14 per share. It is expected that rm A will grow by 15% for next six years and 5% thereafter. It is also known that firm A's beta is 1.5, risk free rate is 1%, and market risk premium is 6%. Estimate the stock value of rm A. (10 points)
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