1. What is the value of a 20-year, noncallable bond with an annual coupon rate of 9.5%, but making semiannual interest payments? The bond has a face value of $1,000, and you require an annual 8.4% discount rate for this investment.
$1,105.69
$1,133.34
$1,161.67
$1,190.71
$1,220.48
2. Calculate the required rate of return for Nashua Inc., assuming that (1) the risk-free rate is 7% , (2) the expected return on the market portfolio is 12%, (3) the firm has a beta of 1.20, and (4) its realized rate of return has averaged 15.0% over the last 5 years.
10.29%
10.83%
11.40%
12.00%
13.00%