You are required to show your work. Providing answers alone will not get you full credit. 1. You are considering the following corporate bond: a. What is the current bond price if the coupons are paid semi-annually? (3 marks) b. Is the bond a discount or premium bond? Explain. ( 2 marks) c. Calculate its current yield. ( 2 marks) 2. Suppose ZBA Inc., just paid a dividend of $4 per share. It is expected that the dividends will grow at a constant rate of 3 percent per year indefinitely. If investors require a 10 percent return on ZBA stock, a. What is the current price today? ( 3 marks) b. What will the price be in three years? (2 marks) 3. MYG Corporation just issued some new preferred stock. The issue will pay an annual dividend of $2.50 in perpetuity, beginning 4 years from now. If the market requires a return of 5 percent on this investment, how much does a share of preferred stock cost today? ( 6 marks) 4. EYP Inc. stock is selling for $25 per share. The next dividend will be $0.80 per share, and the dividend is expected to grow at 4 percent forever. What is the dividend yield? The capital gain yield? The total required return? (4 marks) 5. MBT Inc. will pay a dividend of $1.80 per share next year. Dividends are expected to grow at a rate of 7% until the end of year 3 , and will grow at a constant rate of 2% thereafter. What is the current share price of the common stock if investors require a return of 10% on common stock? (8 marks)