Part 1. Yield to Maturity
Calculate the yield to maturity of an 8% coupon bond with 5 years to maturity if the bond sells for $800. The face value of the bond is $1,000.
Part 2. Valuing Stocks with Constant Dividends
A stock pays $2.50 in dividends and has a required rate of return of 12%. Calculate the current price. What if the required rate of return is 8%
Part 3. Valuing Stocks with Constant Dividend Growth Rates.
A stock pays $2.00 per year in dividends. It is expected to grow at 7% a year. If your required rate of return is 12% what is the price of the stock. The growth rate changes to 4%. Now what is the price of the stock? (required rate of return does not change)