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Finance: Bonds & Stock

1. What would be the roughly price of a $1000 par value bond that pays $50 annual interest and has 15 years to maturity if the yield on similar bonds is 8%?


2. A 10 year, $1000 par value bond pays 8% annual interest. Complete this chart:

                                    YTM          Price of Bond







3. What is the price of a zero coupon bond that has a par value of $1000 and 8 years to maturity if the yield on similar bonds is 5%?


4. What is the price of a $1000 par value bond, 2 years from now, with a 6% coupon rate paid semi-annually if the bond has 7 years to maturity and the YTM on similar bonds is 8% annually?


5. What is the current yield of a bond that pays 10% annual interest and has a price of $850?


6.  Matt Inc, just paid a $2 annual dividend on its common stock.  The dividend is expected to increase at 6% per year indefinitely.  If the required rate of return is 18%, what is the value of the stock today?


7.  Sam’s Co. next annual dividend is expected to be $7. The growth rate in dividends over the following three years is forecasted at 15%.  After that, the growth rate is expected to equal the industry average of 5%, if the required rate of return is 16%, What is the price of the stock after one year?


8. Explain stock market and ups & downs of stock price.


9.  We look at the balance sheet when we are deciding on what long-term investments should the firm engaged in.  Explain the items we look at in the balance sheet.


10.  Explain why debt and equity are important for corporate finance.

Posted in Math, asked by Adeep, 6 years ago. 2070 hits.
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