1. [4 points] A 12-year, $1,000 par value bond has 8 years left to maturity and its coupon rate is 8%, with interest paid semi-annually. Answer the following questions for this bond.
   1. If the required return on this bond (the current market rate for similar bonds) is 6%, will this bond sell for a premium or a discount (no calculations are needed)?
   2. What is the bonds current price if the market rate (required return) is 4.5%?
   3. If the bond is currently quoted at (selling for) $939.50 in the market, what is the Yield to Maturity?

2. [7 points] You own a stock that you are considering selling. The current dividend is $1.30/share. Your required return for this stock is 8%. The current market price of the stock is $250. Consider each of the following situations separately.
   1. If the dividend is fixed (preferred stock), what is the value of the stock? Should you sell it?
   2. If the dividend grows at 3% indefinitely, what is the value of the stock? Should you sell it?
   3. If the dividend grows at 6% per year for each of the first two years and then 3% indefinitely, what is the value of the stock? Should you sell it?

3. [4 points] You are considering purchasing Coca-Cola stock but would like to know more information about risk and returns before you make the purchase. Next years possible returns for Coca-Cola and their probabilities of occurring are listed in the table below.

Probabilities	Possible Returns
20%	3%
55%	8%
25%	12%

Calculate:

1. The expected return for Coca-Col
2. The standard deviation and coefficient of variation for Coca-Cola.

4. (10 points) You are analyzing Facebook and want to determine their stocks intrinsic value per share. You know that their 2018 Free Cash Flows are $2.3 billion. They are implementing some new software and expect their FCF to grow at 10% next year, 5% the following year, and then at 3% indefinitely. You calculate their WACC (required return) at 10.5%. Facebook has $31 billion in non-operating assets (ST investments), they have $6 billion in debt and no preferred stock. They currently have 2.85 billion shares of stock outstanding.
   1. Calculate the FCFs for next year and the following year.
   2. Calculate the Horizon Value for Facebook (value at the end of year 2).
   3. Find the PV of the future FCFs and horizon value to determine the value of Facebooks operations.
   4. Determine the intrinsic value per share of Facebooks stock