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thank you Answer all the questions. Your work must be printed. You must show work, answers without work are worthless. 1. a. Price a French
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Answer all the questions. Your work must be printed. You must show work, answers without work are worthless. 1. a. Price a French government Zero-Coupon bond with 7 years to maturity and yield 5.0%. b. Price a US Treasury Zero-Coupon bond with 4 years to maturity and yield 4.20% (US bond assume semi-annual compounding. c. Price a US Treasury Zero-Coupon bond with six months to maturity and yield 4.00% (US bond assume semi-annual compounding. 2. a. Price a German government bond with a 4.0% coupon rate and 20 years to maturity. The yield to maturity on similar bonds is 5.0%. b. Compute the bond current yield. c. Compute the bond price one year later and the capital gains rate d. Show the relationship between the current yield, the capital gains rate and the yield to maturity. 3. a. Price a 18 years to maturity US treasury with 4% coupon rate and 5.0% yield. b. Calculate section a bond price 75 days into a 183 -coupon period. Show the dirty price, accrued interest and clean price. 4. Two companies ND Corp and GD Inc next dividend is expected to be $6.00, each. ND's dividend is expected to remain constant forever. GD is expected to grow at a constant rate of 4.0% every year forever. The required discount rate is 16%. a. Compute both stock prices today. b. Compute the one-year return of ND Corp and GD Inc stocks. Use the price and dividend in year one and compute the rate of retum, consider a purchase price as the current stock price. c. Compute both stock prices eleven years from today. 5. The Square Bagel Company has just reported $4 earnings per share. The company required rate of return is 12% and Return on Equity is 20%. Management considers three options: A- Permanent dividend payout of 75%. B- National expansion that will require 25% dividend payout for five years, and return to 75% permanent dividend payout after that. C- Worldwide expansion that will require zero dividend payout for twelve years and return to 75% permanent dividend payout after in time period 13 !. Calculate the stock price under the three options Step by Step Solution
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