Sara has one share of stock and one bond. The total value of the two securities is $1,123.21. The stock pays annual dividends. The next dividend is expected to be $14.95 and paid in one year. In two years, the dividend is expected to be $13.42 and the stock is expected to be priced at $299.76. The stock has an expected return of 13.82 percent per year. The bond has a coupon rate of 6.20 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond? O7.68% (plus or minus 4 bps) 3.79% (plus or minus 4 bps) 7.57% (plus or minus 4 bps) 8.35% (plus or minus 4 bps) the answer cannot be obtained based on the given information
Sara has one share of stock and one bond. The total value of the two securities is $1,123.21. The stock pays annual dividends. The next dividend is expected to be $14.95 and paid in one year. In two years, the dividend is expected to be $13.42 and the stock is expected to be priced at $299.76. The stock has an expected return of 13.82 percent per year. The bond has a coupon rate of 6.20 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond? O7.68% (plus or minus 4 bps) 3.79% (plus or minus 4 bps) 7.57% (plus or minus 4 bps) 8.35% (plus or minus 4 bps) the answer cannot be obtained based on the given information
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Sara has one share of stock and one bond. The total value of the two securities is $1,123.21. The stock pays annual dividends. The next dividend is expected to
be $14.95 and paid in one year. In two years, the dividend is expected to be $13.42 and the stock is expected to be priced at $299.76. The stock has an
expected return of 13.82 percent per year. The bond has a coupon rate of 6.20 percent and a face value of $1,000; pays semi-annual coupons with the next
coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond?
O7.68% (plus or minus 4 bps)
3.79% (plus or minus 4 bps)
O7.57% (plus or minus 4 bps)
8.35% (plus or minus 4 bps)
the answer cannot be obtained based on the given information
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