Question - The Delta Corporation has issued a new series of bonds. The bonds sold at par (1000), have a 15% coupon and mature 20 years after issue. Coupon payments are made semi-annually. What was the price of the bond 6 years after issue, assuming interest rates had fallen to 12 percent. Explain the rationale for the observed price change

Question - Raul and Bing are considering investing in the computer manufacturer Dells shares. Raul has an investment horizon of 3 years while Bing has a 12-year investment horizon. Both investors agree on the dividends expected over the coming year and the expected growth rate of future dividends. They also agree on the degree of risk attached to the stock.

Based on the above, would both Raul and Bing arrive at the same valuation of Dells shares? Explain.