14. Five years ago Bei Inc. sold 20-year, $1,000 par value, semi-annual coupon bonds at a price of

$1,192 per bond. At that time the market rate (i.e., yield to maturity or discount rate) was 9%. Today the market rate is 10%; therefore the bonds are currently selling:

 A. at a discount.

 B. at a premium.

 C. at par.

 D. above the market price.

 E. insufficient information to say.

15.  ABC, Inc will pay a dividend of $4 one year from now. The dividend will grow at a constant rate of 6% per year. The β (beta) of ABC, Inc is 1.25, Rm (the market return) is 9%, and the Rf (risk free rate) is 1%. What is the price of the firm’s stock?

A.       $63.60

B.       $84.80

C.       $80.00

D.       $60.00

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