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You own a 30 year, $ 1000 face value bond with a coupon of 8%, that you bought for $ 1000. 5 years later you
You own a 30 year, $ 1000 face value bond with a coupon of 8%, that you bought for $ 1000. 5 years later you now want to sell it. The market price is $ 850.
1. Compute the yield till maturity for the buyer.
2. What was you rate of return?
You buy a share that paid a dividend of $ 1 last year for $ 25. Yoy require a 20% return. Price the share if:
a. g = 10%
b. g=20%
c. g=5%
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