1. A bond pays interest semi-annually and sells for $1,200. It has 9 years left to maturity. Par value is $1,000. What is its annual coupon payment if its promised annual YTM is 12%?
2. A firm is expected to pay a dividend of $2.65 next year and $2.80 the following year. Financial analysts believe the stock will be at their price target of $45 in two years.
Compute the value of this stock with a required return of 12.6 percent.