1. A 7.2% coupon bearing bond pays interest semi-annually and has a maturity of 4 years. If the annual yield to maturity is 5.9%, what is the current price of this bond? (Answer to the nearest penny.)
2. A company just paid a dividend of $1.40 per share. The consensus forecast of financial analysts is a dividend of $1.70 per share next year and $2.40 per share two years from now. Thereafter, you expect the dividend to grow 6% per year indefinitely into the future. If the required rate of return is 8% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)
3. A company just paid a dividend of $1.30 per share. You expect the dividend to grow 13% over the next year and 9% two years from now. After two years, you have estimated that the dividend will continue to grow indefinitely at the rate of 6% per year. If the required rate of return is 9% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)