What makes bonds sell at a premium, par value, or discount?

Please show and describe the dividend discount model of common stock
valuation.

Are the costs of debt and equity observable in the capital markets? If not how do
you estimate that cost of capital?

The expected annual cash flow on a restaurant is $300,000 (assume growth =0%), and my cost of equity capital for restaurants is 25% (restaurants are veryrisky!). What is the maximum price I am willing to pay for that business?A stock has a current dividend of $2.00, a forecasted growth rate of 10%, a beta =1.50, market return = 12% and the risk-free rate (30 year US T-Bond YTM) =4%. The current stock price on the NYSE is $15. What is the value of one shareof the stock and is the stock over- or under-valued?

Answer rating: 100% (QA)

Bonds can sell at a premium if the coupon rate interest rate is higher than the prevailing market interest rate making the bond more attractive to inv... View the full answer