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1. Calculate the bond in each of the three situations

July 21, 2020/in Feeds /by admin

1. Calculate the bond in each of the three
situations: Bond at Par, Premium Bond and Zero Coupon Bond
Assumptions: $1000 face value of Bond
Coupon Rate = 5%
Duration (maturity) = 5yrs
Premium Bond yield = 4%

2. Which one of the following correctly defines the constant dividend growth model?
A. R = (D1 ¸ P0) + g
B. P0 = (D1 ¸ R) + g
C. R = (P0 ¸ D0) + g
D. P0 = D0 ¸ (R-g)
E. D0 = P0 ´ (R-g)

3. Angelina’s made two announcements concerning its common stock today. First, the company announced that its next annual dividend has been set at $2.20 a share. Secondly, the company announced that all future dividends will increase by 5% annually. What is the maximum amount you should pay to purchase a share of Angelina’s stock if your goal is to earn a 10% rate of return?
A. $31.60
B. $32.46
C. $37.44
D. $44.00
E. $46.51