The 7 percent bonds issued by Modern Kitchens pay interestsemiannually, mature in eight years, and have a $1,000 face value.Currently, the yield to maturity for these bonds is 7.22%. What isthe market price per bond?
$986.81
S.S. Corporation’s bonds will mature in 15 years. The bonds havea face value of $1,000 and
an 6.5 percent coupon rate, paid semiannually. The price of thebonds is $1,050. What is the yield to maturity?
5.99%
Callaghan Motor’s bonds have 7 years remaining to maturity.Interest is paid annually, the
bonds have a $1,000 par value, and the coupon interest rate is5.5 percent. The bonds have a yield to maturity of 8 percent.
1). What is the current market price of these bonds?
$869.84
2). What is the current yield?
6.32%
3). What is the capital gains yield?
1.68%
4). These bonds sell at
a. par b. a premium c. a discount
Discount.
Nungesser Corporation has issued bonds that have a 9 percentcoupon rate, payable
semiannually. The bonds mature in 6 years, have a face value of$1,000, and a yield to maturity of 8.5 percent.
1). What is the price of the bonds?
$1,023.13
2). What is the current yield?
8.80%
3). What is the capital gains yield?
-0.30%
4). These bonds sell at
a. par b. a premium c. a discount
Premium.
Getty Markets has bonds outstanding that have a real return of3.08 percent. The current rate of inflation is 3.1 percent. What isthe nominal rate of return on these bonds?
6.28%
Suppose the nominal rate you see on a Treasury bill is 4.31percent and its real rate is 2.5 percent, what is the inflationrate?
1.77%
Problem set 2
Homework: 1, 3, 4, 6, 8, 9, 11, 12
Suppose you are thinking of purchasing the stock of Moore Oil,Inc. You expect the stock to pay a dividend of $0.75 per share atthe end of Year 1 and $1.75 per share at the end of Year 2. Youbelieve you can sell the stock for $15.50 at the end of Year 2.What is the value per share of the company’s stock if the requiredrate of return is 12 percent?
$14.42
Investors expect Microtech to pay the first dividend of $1.25 atthe end of Year 2. The dividend should grow at a rate of 8 percentper year during Years 3, 4, and 5. The stock can be sold for $42 atthe end of Year 5. Determine the current market value of thecompany’s stock if the required rate of return is 12 percent.
$27.61
Diets For You announced today that it will begin paying annualdividends next year.
The first dividend will be $1.25 a share. The followingdividends will be $0.25, $0.25,
$0.50, and $0.75 a share annually for the following 4 years,respectively. At the end of
the fifth year, the stock could be sold for $18. How much areyou willing to pay to buy
one share of this stock today if your desired rate of return is8.5 percent?
$14.39
Please Show all work and steps typed as I am onmobile
