Bond Valuation

1. What is the price of the following annual bond? Is it is premium,

discount or par value bond?

face value: $1,000

maturity: 10 years
coupon rate: 8%
discount rate: 9%

2. What is the price of the following annual bond? Is it is premium,

discount or par value bond?

face value: $1,000

maturity: 50 years
coupon rate: 10%
discount rate: 12%

3. What is the value of the following semi-annual bond? Is it is

premium, discount or par value bond?

face value: $1,000

maturity: 10 years
coupon rate: 10%
discount rate: 9%

4. What is the value of the following semi-annual bond? Is it is

premium, discount or par value bond?

face value: $1,000

maturity: 9.5 years
coupon rate: 7%
discount rate: 7%

5. What is the value of the following semi-annual bond? Is it is

premium, discount or par value bond?

face value: $1,000

maturity: 20 years
coupon rate: 9%
discount rate: 10%
 6. What is the price of the following quarterly bond? Is it is premium,
discount or par value bond?

face value: 1,000

maturity: 10 years
coupon rate: 10%
discount rate: 8%

7. What is the price of the following semi-annual bond? Is it is premium,

discount or par value bond?

face value: $1,000

maturity: 10 years
coupon rate: 8%
discount rate: 9%

Bond Returns

8. What is the yield to maturity (YTM) and the yield to call (YTC) of the
following annual bond?

face value: $1,000

maturity: 10 years
coupon rate: 8%
price: $925
call price: $1,150
years to call: 5

9. What is the yield to maturity and the yield to call of the following
annual bond?

face value: $1,000

maturity: 50 years
coupon rate: 10%
price: $850
call price: $1,100
years to call: 10

10. What is the yield to maturity and the yield to call of the following
semi-annual bond?
 face value: $1,000
maturity: 10 years
coupon rate: 10%
price: $1,000
call price: $1,150
years to call: 4

11. What is the yield to maturity and the yield to call of the following
semi-annual bond?

face value: $1,000

maturity: 9.5 years
coupon rate: 7%
price: $1,020
call price: $1,150
years to call: 3

12. What is the yield to maturity and the yield to call of the following
quarterly bond?

face value: 1,000

maturity: 10 years
coupon rate: 10%
price: $1,100
call price: $1,200
years to call: 5

Common Stock

13. KKL Enterprises pays a dividend of $1.50, and you expect the
dividend to remain constant. How much would you pay for the
stock, if your required rate of return were 11%?

14. GBS Enterprises has just paid a dividend of $2.00, and you expect
the dividend to increase at 3% forever. How much would you pay
for the stock, if your required rate of return were 9%?

15. GHI Corporation has just paid a dividend of $1.00, and it is

expected to increase for four years at 8%. Thereafter, it will increase
at 2% and r = 7%?
 16. What is the price of XZZ common stock? d0 = $2.00 and is expected
to increase for three years at 10%. Thereafter, it will increase at 2%
and r = 7%.

17. GEF Corporation is expected to pay a constant dividend for the

next three years. In the fourth year, the dividends will begin to grow
constantly by 1.3%. If this year's dividend was $3.00 and the
appropriate discount rate is 7%, what is the current price of GEF
stock?

18. JKH Corporation is expected to pay the following dividends, d1

=$1.34; d2 = $1.78; d3 = $2.01, for the next three years. The dividends
will to grow constantly by 2.4%, and the appropriate discount rate is
7%, what is the current price of JKH stock?

19. YHT Corporation is expected to pay a dividend growing at 30% for

the next three years. In the fourth year, the dividends will begin to
grow constantly by 1.5%. If this year's dividend was $5.00 and the
appropriate discount rate is 13%, what is the current price of YHT
stock?

Preferred Stock

20. A firm pays a preferred dividend of $5.50, and the required rate of
return is 10.2%. What should be the price of the preferred share?

21. A firm pays a preferred dividend of $6.20, and the required rate of
return is 8.9%. What should be the price of the preferred share?

22. A firm pays a preferred dividend of $3.30, and the required rate of
return is 10.7%. What should be the price of the preferred share?

23. A firm pays a preferred dividend of $7.60, and the required rate of
return is 8.3%. What should be the price of the preferred share?

24. A firm pays a preferred dividend of $7.45, and the required rate of
return is 11.2%. What should be the price of the preferred share?

Implied Rate of Return and Growth

25. HJJ Enterprises has just paid a dividend of $1.50. If you expect the
dividend to increase at 4% forever, and you are now willing to pay
$27.50 for the stock. What is the implied required rate of return?

26. GII Enterprises will pay a dividend of $1.50 next year, and your
required rate of return is 12%. If you expect the dividend to grow
forever (at a constant rate), and you are now willing to pay $30.00
to purchase GII stock. What must the implied growth rate?

27. IIL has pays a constant dividend of $1.50, and you are now to pay
$30.00 for the stock. What is the implied required rate of return?

28. IKI Enterprises has just paid a dividend of $4.50. You expect the
dividend to increase at 3.2% forever, and you are now willing to pay
$55.54 for the stock. What is the implied required rate of return?

29. A firm will pay a dividend of $3.31 next year, and your required rate
of return is 15.7%. If you expect the dividend to grow forever (at a
constant rate), and you are now willing to pay $30.00 to purchase
the stock. What must the implied growth rate?

30. A firm pays a preferred dividend of $3.45 on a share currently

selling for $45.33. What is the implied required rate of return?