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    This document appears to be homework assignments from a corporate finance or valuation course. It includes 4 problems about calculating bond prices given yield to maturity, determining the value of preferred stock given its dividend and required return, and calculating dividend yield, capital gain rate, and required rate of return for a common stock. It also asks whether a common stock should be purchased given its expected growth rate, dividend, and an investor's required rate of return.

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    IUP504-3 HW

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    This document appears to be homework assignments from a corporate finance or valuation course. It includes 4 problems about calculating bond prices given yield to maturity, determining the value of preferred stock given its dividend and required return, and calculating dividend yield, capital gain rate, and required rate of return for a common stock. It also asks whether a common stock should be purchased given its expected growth rate, dividend, and an investor's required rate of return.

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    Iup504-3 HW

    Uploaded by

    Bartholomew
    This document appears to be homework assignments from a corporate finance or valuation course. It includes 4 problems about calculating bond prices given yield to maturity, determining the value of preferred stock given its dividend and required return, and calculating dividend yield, capital gain rate, and required rate of return for a common stock. It also asks whether a common stock should be purchased given its expected growth rate, dividend, and an investor's required rate of return.

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    BS, UIBE IUP504 uiberen

    Ch 3 Valuation of Securities
    Homework

    1. Suppose that GMAC issued a bond with 10 years until maturity, a face value of $1000, and a
    coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued
    was 6%.
    What was the price of this bond when it was issued?

    2. The preferred stock of Armlo pays a $2.75 dividend. What is the value of the stock if your
    required return is 9%?

    3. Anle Corporation has a current price of $20, is expected to pay a dividend of $1 in one year,
    and its expected price right after paying that dividend is $22.
    a. What is Anle’s expected dividend yield?
    b. What is Anle’s expected capital gain rate?
    c. What is Anle’s required rate of return?

    4. The common stock of B&S currently sells for $23 per share. It is expected that a constant
    growth rate of 10.5% and end-of-year dividend of $2.5.
    a. What is your required rate of return?
    b. If you require a return of 17%, should you purchase the stock?

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