1. Suppose a 5-year, $1,000 bond with annual coupons has a price of $960 and a yield to maturity of 7%.
What is the bond's coupon rate? The coupon rate is ----------%. (Round to two decimal places.)
2. Suppose a 5-year, $1,000 bond with annual coupons has a price of $960 and a yield to maturity of 6%.
What is the bond's coupon rate? The coupon rate is ----------%. (Round to two decimal places.)
3. Colgate-Palmolive Company has just paid an annual dividend of $1.12. Analysts are predicting dividends to grow by $0.14 per year over the next five years. After then, Colgate's earnings are expected to grow 6.4% per year, and its dividend payout rate will remain constant. If Colgate's equity cost of capital is 9.4% per year, what price does the dividend-discount model predict Colgate stock should sell for today?
The price per share is $ ---------. (Round to two decimal places.)