1. Using excel find the answers to the following: (remember to use excel functions) a. Find the...
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1. Using excel find the answers to the following: (remember to use excel functions)
a. Find the price today of a five year bond with a $1000 face value with a 10 percent coupon. Assume that investors require an 8 percent YTM. Assume also that payments are made semi-annually.
b. Suppose the bond in problem 1 sells for $1200 today. Solve for its YTM.
c. Find the price of a share of common stock that is expected to pay a dividend of $2 next year. Dividends are expected to grow at 4 percent through year 3, then at 3 percent for 2 years, and then 2 percent forever. Assume that stockholders require a 10 percent return.
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