Valuation
1. Yield to Maturity
Calculate the yield to maturity of
an 8% coupon bond with 5 years to maturity if the bond sells for $800. The face
value of the bond is $1,000.
2. Valuing Stocks with Constant
Dividends
A stock pays $2.50 in dividends and
has a required rate of return of 12%. Calculate the current price.
What if the required rate of return
is 8%
3. Valuing Stocks with Constant
Dividend Growth Rates.
A stock pays $2.00 per year in
dividends. It is expected to grow at 7% a year.
If your required rate of return is
12% what is the price of the stock.
The growth rate changes to 4%. Now
what is the price of the stock?
(required rate of return does not
change)
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