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the answers are provided, however i dont know hot to solve them. 3. Consider a bond paying a coupon rate of 9.25% per year semiannually

image text in transcribedimage text in transcribedthe answers are provided, however i dont know hot to solve them.

3. Consider a bond paying a coupon rate of 9.25% per year semiannually when the market interest rate is only 3.7% per half-year. The bond has five years until maturity. Find the bond's price today and six months from now after the next coupon is paid The bond pays $46.25 every six months. Current price: [$46.25 Annuity factor (3.7%,10)]+[$1,000PV factor (3.7%,10)]=$1,076.16 Assuming the market interest rate remains 3.7% per half year, price six months from now: [$46.25 Annuity factor (3.7%,9)]+[$1,000PV factor (3.7%,9)]=$1,069.73 4. You are evaluating a company's stock. The stock just paid a dividend of $1.75. Dividends are expected to grow at a constant rate of 5 for long time into the future. The required rate of return (Rs) on the stock is 12 percent. What is the fair present value? $26.25 5. A preferred stock is expected to pay a constant quarterly dividend of $1.25 per quarter into the future. The required rate of return, Rs, on the preferred stock is 13.5 percent. What is the fair value (or price) of this stock? 1. A semiannual payment bond with a $1,000 par has a 7 percent quoted coupon rate, a 7 percent promised YTM, and 10 years to maturity. What is the bond's duration? Solution: 7.35 years 2. YIELD CURVE FOR ZERO COUPON BONDS RATED AA Assume that there are no liquidity premiums. - - To the nearest basis point, what is the expected one year forward rate in year 3 ? - - What is the expected interest rate on a four-year maturity AA zero coupon bond purchased six years from today

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