BUSN 379 WEEK 3 HOMEWORK – LATEST 2016
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BUSN 379 Week 3 Homework – Latest 2016
6. Bond Prices. App Store Co. issued 20-year bonds one year ago
at a coupon rate of 6.1 percent. The bonds make semiannual payments. If the YTM
on these bonds is 5.3 percent, what is the current bond price?
11. Valuing Preferred Stock. 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 percent on this stock, how much should you pay today?
12. Stock Valuation. Alexander Corp. will pay a dividend of
$2.72 next year. The company has stated that it will maintain a constant growth
rate of 4.5 percent a year forever. If you want a return of 12 percent, how
much will you pay for the stock? What if you want a return of 8 percent? What
does this tell you about the relationship between the required return and the
stock price?
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