Problem Set 2 1) Queen and Bees, Inc. offers a 7% coupon bond with semi-annual payments and a yield to maturity of 7.73%. The bonds mature in 9 years. What is the market price of a $1,000 face value bond? 2) A bond is listed in the Financial Post as 8.800 of September 22/25 and is semi-annual. This bond pays how much interest and when? 3) The zero-coupon bonds of Quipta Inc. have a market price of $394.47, a face value of $1,000, and a yield to maturity of 6.87%. How many years is it until this bond matures?? 4) All else constant, under what circumstances will a bond will sell at a premium or discount? Think about coupon rate and the yield to maturity. 5) A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield rises to 6% from the current yield of 4.5%? 6) Explain why some bond investors are subject to liquidity risk and/or default risk. How does each of these risks affect the yield of a bond? 7) The net present value of a growth opportunity, NPVGO, can be defined as what? 8) If the quoted dividend yield in the paper was 2.2% and the dividend was listed as $0.72 what price is used in the calculation of dividend yield? 9) What should be paid for Overland common stock? Overland has just paid a dividend of $2.25. These dividends are expected to grow at a rate of 5% in the foreseeable future. The required rate of return is 11%. (round to 2 decimal places) 10) Weisbro and Sons' common stock sells for $21 a share and pays an annual dividend that increases by 5% annually. The market rate of return on this stock is 9%. What is the amount of the last dividend paid by Weisbro and Sons?