Calculate the bond current yield and yield to maturity

Assignment Help Financial Management

Reference no: EM132004148

Following are the securities and projections for Mogul Corp:

Stock A: REQUIRED RATE OF RETURN = 5% Constant-growth - growth rate of 3% D0 = $3.00

Stock B: REQUIRED RATE OF RETURN = 7% D0 = $4.00, growth at 5% per year for 2 years, followed by 4% forever

Stock C: REQUIRED RATE OF RETURN = 9% D0 = $2.00, growth at 25% for next 4 years, followed by 5% forever

Mogul has a 3.5% Treasury bond, semi-annual interest, with 4 years left to maturity and a quoted price of $962.81.

PRIMARY POST: Question 3

1) Calculate the bond’s current yield and yield to maturity.

2) Calculate the value per share today for stock A.

3) Calculate the value per share 4 years from today for stock B

4) Calculate the value per share today for stock C.

REPLY POST: Question 3

1) Calculate the bond’s capital gain yield.

2) Calculate the value per share one year from today for stock A.

3) Calculate the value per share today for stock B.

4) Do you agree with the stock valuation in part 4 of the primary post? If the stock was selling for $143.01 on January 1, 2018, would you purchase it? Use the correct stock valuation as the basis for your answer.

Reference no: EM132004148

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