4. If a stock is expected to pay a $2 dividend, and has an expected growth rate of 9%, what is the expected rate of return if the stock sells for $50.

5. What price would you pay for a stock that just paid a $1 dividend has a 6% growth rate, if your required rate of return is 15%?

6. What is the expected rate of return on a stock if the risk free rate is 2%, the market risk premium is 8%, and the stock has a beta of 1.3?

7. What is the current yield on a bond with a 5.5% coupon rate, if the current price is $925?

8. What is the yield to maturity on the bond in #6, if the bond matures in 10 years?

9. What price would you pay for a bond that has an 8% coupon rate, a 25 year maturity, if the current market rate on identical bonds is 6.5%? (nearest $1)

10. If inflation goes up and interest rates increase , what would happen?

Answer rating: 100% (QA)

4 To calculate the expected rate of return also known as the dividend yield on a stock you can use the Gordon Growth Model formula Expected Rate of Re... View the full answer