1. A bond has a coupon rate of 8 percent and has 12 years to maturity....

 

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1. A bond has a coupon rate of 8 percent and has 12 years to maturity. This bond has a face value of $1000 and is selling in the market for $1231. What is this bond's yield to maturity? Use both approximation and trial and error method. (2+5) 2. Current dividend = $1.80, required return = 11%, dividends are expected to grow at 8% annually for 5 years and followed by 0% growth in year 6 to infinity. Find out the price of the share. (5) Free cash flows (FCF) of a company are given below: Year(t) Free Cash Flows Other data 2007 $400000 2008 450000 2009 520000 2010 560000 2011 600000 Find out the Value of the Company. (5) 4. A bond has an annual coupon rate of 6 percent and 3 years to maturity. It has a yield to maturity of 8 percent with a face value of $1000. Calculate the modified duration of this bond. (5) 5. Face value of the Bond = $1000, Annual Coupon Payment = 10%, YTM = 12%, Maturity = 10 years, Reinvestment Rate = 11%, what would be the Semi- Annual Realized Compound Yield of this bond? (5) 6. Current dividend = $2.5, share price = $100, required return = 10%. constant growth rate=? (3) 3. Growth rate of FCF, beyond 2011 to infinity = 3% required rate of return = 9% 1. A bond has a coupon rate of 8 percent and has 12 years to maturity. This bond has a face value of $1000 and is selling in the market for $1231. What is this bond's yield to maturity? Use both approximation and trial and error method. (2+5) 2. Current dividend = $1.80, required return = 11%, dividends are expected to grow at 8% annually for 5 years and followed by 0% growth in year 6 to infinity. Find out the price of the share. (5) Free cash flows (FCF) of a company are given below: Year(t) Free Cash Flows Other data 2007 $400000 2008 450000 2009 520000 2010 560000 2011 600000 Find out the Value of the Company. (5) 4. A bond has an annual coupon rate of 6 percent and 3 years to maturity. It has a yield to maturity of 8 percent with a face value of $1000. Calculate the modified duration of this bond. (5) 5. Face value of the Bond = $1000, Annual Coupon Payment = 10%, YTM = 12%, Maturity = 10 years, Reinvestment Rate = 11%, what would be the Semi- Annual Realized Compound Yield of this bond? (5) 6. Current dividend = $2.5, share price = $100, required return = 10%. constant growth rate=? (3) 3. Growth rate of FCF, beyond 2011 to infinity = 3% required rate of return = 9%

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