You are analyzing the XYZ company. Its current stock price is $20. After reviewing XYZs financial data,

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You are analyzing the XYZ company. Its current stock price is $20. After reviewing XYZ’s financial data, you find that last year’s earnings were $2.5 per share. The Firm’s ROE is 12%, and you expect it to stay that way for the foreseeable future. The firm has a stable dividend payout policy of 30%. The current nominal risk-free rate is 6%, the expected market return is 14%, and the XYZ beta is 1.3. Value XYZ and indicate what you should do based on your estimate

Find the fair value of a bond with a $1,000 par value, a remaining life of 10 years, and a coupon rate of 10% per year paid semi-annually. Assume that at the present time, the required rate of return on the bond is 12% per year.