The same firm issues two different bonds. The bonds are identical in every respect except for their time to maturity. Bond A matures in 8 years and Bond B matures in 6 years. Which bond has a higher price?

a. Bond A

b. Bond B

c. Both have the same value

d. One must know the required return and coupon rate to answer the question.

e. One must know the required return only.

A firm just paid a dividend of $4.00 on its stock, and dividend is expected to grow at a constant rate forever. The price of this stock is $60 and the investors required rate of return is 8%. What is the growth rate expected by the market in the dividend stream?

a. 1.33%

b. 8.00%

c. 1.25%

d. 6.67%

e. None of the above