Fin 301 Part 3 Problems

Fin 301 Part 3 Problems

51. Determine the price of a $1,000 par bond that has a ten-year maturity and 10% coupon while the market rate of interest is 6%.

52. Determine the value of a share of preferred stock that has a $2 dividend while the market rate interest is 12%.

53. Determine the value of a share of common stock that has a $1 dividend, 4% growth rate, and a required rate of return of 13%.

54. An IBM bond pays 7% interest, and a Florida State bonds pays 5%. If you are in a 40% tax bracket, which should you purchase? (Assume that the level, of risk is the same for both bonds.)