Reference no: EM132067628

Questions -

1. Bond q currently sales for $965. The coupon rate on the bond is 6%. The bond matures in 12 years. What is the current yield by the prevailing market rate?

2. Bond R currently has a coupon of 9.16%. The prevailing yield rate on the bond is 7.25%. If the bond has 16 years to maturity, what is the current price of the bond on the market?

3. Bond S is a 15-year bond, issued 2 years ago at a coupon rate of 8.2%. If the bonds currently sell for $1120 what is the current prevailing rate of interest return expected on this type of bond?

4. Suppose you purchase Bond T, a 7% coupon, 15 year bond today at first issuance. If interest rates rise to 8.675%, what is the value of your bond?

5. Jefferson Industries stock currently trades at $38.92 per share. They paid $1.05 per share in dividends last year, and expect those dividends to increase at a rate of growth of 4.54%. Calculate the expected rate of return on this stock.

6. Reed Industries, a competitor in the Northwest, expects 5.8% growth, and recently paid a dividend of $1.28. The expected rate of return is 9.5%. What price should you be willing to pay for RI stock?

7. Market Dominance Company, another competitor, but in a different region of the US trades around $26.12, expects 5% growth in its dividends and just paid a dividend of $1.11. Solve for the rate of return expected in that market.