1. What is bond? What are the main objectives of using bond in financial management?

10pts
2. What is stock? What are the main objectives of using bond in financial management?
10pts
3. An investor requires a return of 12 percent. A stock sells for $19, it pays a dividend of $1,
and the dividends compound annually at 8 percent. What should the price of the stock be?
10pts

4. 3. Flamingo Communications (FC) is fast-growing IT startup specializing in social-media

marketing. You are a financial analyst at AH Ventures, a diversified conglomerate, which
has 10% stake in FC. Your in-house economist projects that FC dividends are expected to
grow at 25% for year 1, 20% for year 2nd and 3rd, 16% for year 4th and 10%-year 5th and
8% for year 6th. From 7th year onwards a stable growth rate of 5% is expected.
If FC’s current stock price is $41, its most recent dividend per share was $1.4 per share
and it’s cost of equity is 10%.
Determine the stock value. 20pts
5. The $1,000 face value ABC bond has a coupon rate of 7%, with interest paid semi-
annually, and matures in 6 years. If the bond is priced to yield 8.5%, what is the bond's
value today? -8pts
6. The HIJ bond has a current price of $850, a maturity value of $1,000, and matures in 5
years. If interest is paid semi-annually and the bond is priced to yield 8%, what is the
bond's annual coupon rate? - 9pts