Finance - Bond related Problems

1.
Assume that the company that you selected has a bond
outstanding that matures in 20 years and has a coupon rate of 6.5%. The
par value of the bond is $1,000.
a.
If the yield to maturity is 9% and the bond pays interest on an
annual basis, whats the current price of the bond? Is the bond selling for
a premium or discount? How can you tell?
b.
If the yield to maturity is 7% but the bond pays interest on a semiannual basis instead of an annual basis, whats the current price of the
bond? Is it different from the value when using annual compounding?
Explain.
c.
Now, assume that the economy enters into a recession and
interest rates fall. The bonds yield to maturity is now 4%. Whats the
bonds new price? How does the price compare with your answer in part
a? Why did the bonds value change?
2.
A bond matures in ten years and is currently selling for $1,225.
The bond pay interest annually, has a par value of $1,000, and a yield to
maturity of 11.75%. Whats the bonds current yield?

1.
A companys common stock dividends are anticipated to grow at a
constant 4.5% growth rate per year going forward. The company just
paid an annual dividend (that is, D-zero) of $3 per share. Whats the
intrinsic value of the stock based on the following required rates of return?
a.
6%
b.
8%
c.
10%
d.
12%

If the stock is currently selling for $40 per share, is the stock
a good buy? Interpret the results and justify your decision.
2.
A company just paid an annual dividend of $2.50 per share.
Dividends are anticipated to grow at a rate of 17% per year for the next
five years and then reduce down to a growth rate of 8.5% per year
forever. The stocks beta is 1.2; the risk-free rate is 4%, and the expected
return on the overall stock market is 11%. Whats the intrinsic value of the
companys common stock?