FINANCE 3010 SPRING 2013 ASSIGNMENT 4 (OPTIONAL) DUE SAT 13.04.13 1.

. A bond has an annual 8 percent coupon rate, a maturity of 10 years, a face value of $1,000, and makes semiannual payments. If the price is $934.96, what is the annual nominal yield to maturity on the bond? (2 MKS) 2. You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond?(3MKS) 3. A $1,000 par value bond pays interest of $35 each quarter and will mature in 10 years. If your nominal annual required rate of return is 12 percent with quarterly compounding, how much should you be willing to pay for this bond?(3MKS) 4. Cold Boxes Ltd. has 100 bonds outstanding (maturity value = $1,000). The nominal required rate of return on these bonds is currently 10 percent, and interest is paid semiannually. The bonds mature in 5 years, and their current market value is $768 per bond. What is the annual coupon interest rate?(2MKS) 5. Johnson stock is currently selling for $40. The expected dividend is $2. This is a constant growth firm. If investors require a return of 15% on this stock, what do they think the growth rate will be?(2 MKS) 6. Walter Company currently earns $3.00 per share and pays $1.00 in dividends. The dividend is expected to double in 9 years and also to grow at that rate beyond that time. The required rate of return is 15%. The estimated stock price is (4MKS) 7. A firm expects to pay dividends at the end of each of the next four years of $2.00, $1.50, $2.00, and $3.50. If growth is then expected to level off at 8 percent, and if you require a 14 percent rate of return, what is the estimated price of this stock? Round calculations to two places.(4MKS)