1) A firm pays a current dividend of $5 and is expected to grow this at 20%...
Question:
2) You analyze two different 10-year bonds in the market, issued by different companies. You note that bonds from company A have a higher yield-to-maturity (YTM) than company B. Describe generally the factors that affect the value of YTM, and explain which factor or factors are most likely to account for the difference in YTM between company A and company B.
3) A bond has a face value of $1,000, an annual coupon rate of 6.0%, an annual yield to maturity of 5.0%, makes semi-annual coupon payments and has four years to maturity.
a) What is the price of this bond?
b) If the yield-to-maturity is 6% (annual rate) in six months’ time, what is my holding period return for the first six months?
Fundamentals of Corporate Finance
ISBN: 978-0133400694
1st canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi