How much dividend income will receive over the next year

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1. A corporation issues a new 10 year bond that has a coupon rate of 4.65% with quarterly dividend payments. Alex purchases 200 of these bonds at a price of $98.75, for a total investment of $19,750. Assuming he holds them to maturity, what will be his rate of return?

2. Rather than holding the bonds described in Problem 1 to maturity, Alex decides to sell them at the end of 6 years. The market value at that point is $97.10, and immediately after receiving his final year 6 dividend, he sells at that price. Compute his rate of return.

3. A corporation plans to issue a series of 5-year zero coupon bonds. Based on the corporation's current bond rating and the current market, investors who hold these bonds to maturity will expect a 3.80% rate of return. What is the expected market price of these bonds when they are issued?

4. Using Google finance, find today's common stock listing for one of your favorite companies. Print the listing, then answer the following questions:


· What is today's price for one share of this stock?
· What was the price one year ago?
· If an investor had purchased 500 shares one year ago and sold it today, what would be her profit or loss?
· What is the current dividend yield?
· If another investor purchased 300 shares of the stock today, and the dividend payments remain constant, how much dividend income will he receive over the next year?

Reference no: EM13297202

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