1. The bonds issued by Zander & Zander bear a 6 percent coupon, payable annually. The bond matures in 15 years and has a $1,000 face value. Currently the bond sells at par. What is the yield to maturity?
2. If a company’s bond rating is changed from CCC to BBB, what happens to the yield to maturity of the company’s bonds?
3. The stock of LOL has a beta of 0.96. The risk-free rate of return is 1.6 percent and the market risk premium is 8.2 percent. What is the required rate of return on LOL stock?