Question: Help! I need step by step work... Than you in advance :) Problem 2 (4 points) Last year, Inzaghi Company issued a 12-year semiannual callable
Help! I need step by step work... Than you in advance :)
Problem 2 (4 points)
Last year, Inzaghi Company issued a 12-year semiannual callable bond at a par value of $1,000 with a coupon rate of 13.86%. The bond, currently, can be called in 5 years with a call price of $1,101. Today, the bond sells for $1,212. What are the YTM and YTC of the bond?
Problem 3 (4 points)
Berlusconi Corporation (BC) recently paid a $1.26 dividend per share. The dividend of BC is expected to grow by 19.75 percent next year, 16 percent the following year, and 11.75 percent the year after before growing at a constant rate of 5.25 percent growth that continues forever. BCs beta is 1.21, the risk-free rate of interest is 2.30 percent, and the market portfolio generates a 12.25 percent rate of return. What is the stock price of BC today?
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