1. Over the next two years xyz corp. will pay dividend of 2 and 2.75 in years 1 and 2. There after dividends will grow at a rate of 2% per year. What is the current value of the firm´s stock assuming a required rate of return of 15%?
2. A 20-year bond has a price of $828.41, a yield of 10%, and duration of 9.386 years. If the bond’s yield increases by 50 basis points, what will be the approximate bond price after the yield change?