What is the bond yield to maturity

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Problem -

(a) You just purchased a $1,000 par value, 5-year, 8% annual coupon bond that pays interest on a semi-annual basis. The bond sells for $950. What is the bond's yield to maturity?

(b) Burwood Led has not paid any cash dividends before but plans to pay at $1.50 per share starting two years from today. The growth rate in dividends is expected to be 3% per annum indefinitely. Assume that the required rate of return on Burwood's shares is 10% per annum. What should be its share price today?

Reference no: EM132850967

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