I. Tany Company issues a new series of bonds and the following data pertains to these bonds:
Issuing date: 1-Jan-08
Par value: $1,000
Sold at: $1,000
The coupon interest: 12%
The bond matured in 30 years
Coupon payments made: 2 times per year
(June 30 and December 31)
1. Find the YTM on 1-Jan-08
2. Assuming that the interest rate has fallen to 10% after 5 years
a. Find the price of the bond
b. Find current yield
c. Find capital gain yield
d. Find total return
Before maturing date by 5.5 years, The Company sold the bonds for 916.42
3. At selling time, find
a. current yield
b. capital gain yield
c. total return
II. ABC Company’s has the following data:
Current stock price 10.75
Last dividend paid 0.75
Required rate of return 8%
Assume that dividend is expected to grow at a constant rate, g, in the future.
Assume that the company has strong financial conditions and it is classified with low risk.
1. Assume rs is expected to remain at 8%, after 5 years from now find the stock price for ABC Company?
III. Hanna Company has the following data:
The financial manager expect to have a period of rapid growth.
Earnings and dividends are expected to grow as follows:
during the next 2 years at a rate of 14%
during year 3 at a rate of 13%
and thereafter at a rate of 6%
the last dividend payment was 1
the required rate of return on the stock is 10%
1. Find the value of the stock now
a. Expected share price year 1 {E(P1)}
b. E(P2)
c. dividend yield for year 1 2 3
d. capital gain yield for year 1 2 3
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