1. An investor buys a 10-year, 7% coupon bond for $1,050, holds it for 1 year, and then sells it for $1,040 right after receiving the coupon payment. What was the investor's rate of return? a) 5.71% b) 6.00% c) 6.67% d) 7.00% 2. How much should you be prepared to pay for a 10-year bond with a 6% coupon, semi-annual payments, and a semi-annually compounded yield of 7.5%? a) $895.78 b) $897.04 c) $938.40 d) $1,312.66 3. If the dividend yield for year 1 is expected to be 5% based on a stock price of $25, what will the year 4 dividend be if dividends grow annually at a constant rate of 6%? a) $1.33 b) $1.49 c) $1.58 d) $1.67 4. What would be the approximate expected price of a stock when dividends are expected to grow at a 25% rate for 3 years, then grow at a constant rate of 5%, if the stock's required return is 13% and next year's dividend will be $4.00? a) $67.60 b) $62.08 c) $68.64 d) $73.44