Question 2 PLEASE SHOW WORKS INSTEAD OF USING EXCEL SHEET OR CALCULATOR.

A firm issues a bond today with a $1,000 face value, an 8% coupon interest rate, and a 25-year maturity. An investor purchases the bond for $1,000.

(2.1) What is the yield to maturity (YTM)? Explain.

(2.2) Suppose the investor bought the bond described previously for $900. What is the YTM?

(2.3) Suppose the bond described previously has a price of $1,100 five years after it is issued.

What is the YTM at that time?

(2.4) As always, the value of the stock is the ______________ of all the _______________. A stocks expected cash dividend divided by its current price is called ________________. Dividend payable on preferred stock are either _______________ or _______________. Usually, both the accumulated preferred dividends and the current preferred dividends must be paid before the ______________________ can receive anything.