A Japanese company has a bond that sells for 107.218 percent of its ¥100,000 par value. The bond has a coupon rate of 6.8 percent paid annually and matures in 20 years. What is the yield to maturity of this bond? Ashburn Company issued 13-year bonds two years ago at a coupon rate of 9.8 percent. The bonds make semiannual payments. If these bonds currently sell for 101 percent of par value, what is the YTM? Bond P is a premium bond with a coupon rate of 9 percent. Bond D is a discount bond with a coupon rate of 5 percent. Both bonds make annual payments, a YTM of 7 percent, a par value of $1,000, and have five years to maturity. What is the current yield for Bond P? For Bond D? If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D?
A Japanese company has a bond that sells for 107.218 percent of its ¥100,000 par value. The bond has a coupon rate of 6.8 percent paid annually and matures in 20 years. What is the yield to maturity of this bond?
Ashburn Company issued 13-year bonds two years ago at a coupon rate of 9.8 percent. The bonds make semiannual payments. If these bonds currently sell for 101 percent of par value, what is the YTM?
Bond P is a premium bond with a coupon rate of 9 percent. Bond D is a discount bond with a coupon rate of 5 percent. Both bonds make annual payments, a YTM of 7 percent, a par value of $1,000, and have five years to maturity.
- What is the current yield for Bond P? For Bond D?
- If interest rates remain unchanged, what is the expected
capital gains yield over the next year for Bond P? For Bond D?
Suppose the following bond quote for IOU Corporation appears in the financial page of today’s newspaper. Assume the bond has a face value of $1,000, and the current date is April 19, 2022.
|
Company (Ticker) |
Coupon |
Maturity |
Last Price |
Last Yield |
Estimated Volume (000s) |
|
IOU (IOU) |
6.85 |
April 19, 2036 |
92.741 |
?? |
73 |
- What is the yield to maturity of the bond?
- What is the current yield?
You purchase a bond with a coupon rate of 7.6 percent, a par value of $1,000, and a clean price of $910. If the next semiannual coupon payment is due in five months, what is the invoice price?
Five Star Corporation will pay a dividend of $4.15 per share next year. The company pledges to increase its dividend by 6.25 percent per year, indefinitely. If you require a return of 9 percent on your investment, how much will you pay for the company’s stock today?
Fegley, Incorporated, has an issue of
E-Eyes.com has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a $20 dividend per year, but the first dividend will not be paid until 20 years from today. If you require a return of 8.75 percent on this stock, how much should you pay today?
The stock price of Fujita Company is $53.70. Investors require a return of 15 percent on similar stocks. If the company plans to pay a dividend of $3.50 next year, what growth rate is expected for the company’s stock price?
Premier, Incorporated, has an odd dividend policy. The company has just paid a dividend of $11.25 per share and has announced that it will increase the dividend by $9.25 per share for each of the next four years, and then never pay another dividend. If you require a return of 13 percent on the company’s stock, how much will you pay for a share today?
McCabe Corporation is expected to pay the following dividends over the next four years: $5.40, $16.40, $21.40, and $3.20. Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 9 percent, what is the current share price?
Synovec Corporation is growing quickly. Dividends are expected to grow at a rate of 32 percent for the next three years, with the growth rate falling off to a constant 6.2 percent, thereafter. If the required return is 14 percent and the company just paid a dividend of $2.85, what is the current share price?
The Dahlia Flower Company has earnings of $1.44 per share.
- If the benchmark PE for the company is 13, how much will you pay for the stock?
- If the benchmark PE for the company is 16, how much will you pay for the stock?
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