What is yield to maturity-market expectation of growth rate

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1) A zero-coupon bond with face value $1,000 and maturity of 6 years sells for $846.0. What is its yield to maturity? Enter your answer as a decimal, rounded to four decimal places.

2) Computer stocks currently provide a required rate of return of 16%. MBI, a large computer company, will pay a year-end dividend of $2 per share. If the stock is selling at $50 per share, what must be the market’s expectation of the growth rate of MBI dividends? Round your answer to four decimal places.

3) The risk-free rate is 11% and the expected return on the market is 14%. Upton Company’s stock has a beta coefficient of 1.5. If Upton's next dividend is $1.5 and the dividends are expected to grow at a constant 3% a year, what would be the current price of Upton’s stock?  Round your answer to two decimal places.

Reference no: EM131047867

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