Following is the data on a $1000 par value bond issued by Google at the end of 2015. Assume that you are planning to buy these bonds as of May 2016.

Google

CIR 6%

Years to maturity 15

ROR. 8%

1. would you buy this bond on may 2016 if the market value was 750

2. Assume the market price of a 5-year bond for IBM is $970 and it has a par value of $1000. The bond has an annual interest of 8 % which is paid annually. What is the (YTM) of the bond?

3. Assume you have a bond with a semi-annual interest payment of $55, on a par value of $1000, and a current market price of $950. What is the current yield of the bond?

4. if a preferred stock pays 11% on its par value of $1000, and your required rate of return is 15%, what is the stock worth to you?

5. If you purchased shares of common stock that pay an end-of-year dividend of $15, what is the expected rate of return if you purchased the stock for $55 per share? Assume the stock is expected to have a constant growth rate of 15%.

6. Kathy Corporation paid $7.15 in dividends per share last year. The firm’s projected growth rate is 15% and is expected to remain so in the near future. If the investor’s required rate of return is 20%, what is the value of the stock?