1. Suppose a German company issues a bond with a par value of 1000 Euro, 15 years to maturity, and a coupon rate of 8.4 percent paid annually. If the yield to maturity is 7.6 percent, what is the current price of the bond?
2. The earnings of F Weather Company are expected to grow at an annual rate of 14% over the next 5 years and then slow to a constant rate of 10% per year. F currently pays a dividend of $0.36 per share. What is the value of F stock to an investor who requires a 16% rate of return? If stock has a market price of $15 do you buy?