1.

       Joe Bob is issuing a 20 year, 8% coupon bond. The market yield on this type of bond is 6%. Find a fair price. (1229.40)
($1,229.40) pmt = FVx Coupon rate

2.       If Joe Bob’s bond immediately falls to a price 980, what is the yield? (8.2%)
8.2%

3.       Last year Timco paid a 5 per share dividend. The beta is 1.7, the market is expected to earn 11%, and the risk free rate is
First CAPM 0.173 or 0.173
Then Perpetuity 28.901734104046
4.       What if Timco’s dividends grow at 6% per year forever? (46.90)
Growing perpetuity 46.902654867257

5.       Find the dividend yield and capital gains yield for the stock in number 4. (.113 and .06)
DY DIV(1+g)/PV 0.113006
CGY g 0.06
6.       What if Timco’s dividends grow at 6% for one year, than at 10% forever after that? (72.60)
5.3 D1
5.83 D2
79.8630136986302 P1
4.51832907075874 PVDI
68.0843989769821 PVP1
72.6027280477408
7.       Stevie Ray can generate 3 in Eps per year forever. The fair return is 14%. They can retain 30% of earnings and invest in a
AIP 21.428571428572 0.7

8.       The spot price is 100. The exercise price on a one year call is 95. The standard deviation of the spot is 20%. The risk free
9.       The spot price is 100. The exercise price on a one year call is 102. The risk free rate is 4%. Find the price of the call if ther
The current price of a 5% coupon, 20 year treasury bond is 983.33. These bonds are earning 5.14%. The risk free rate is 2%. Fin
d a fair price. (1229.40)

%, and the risk free rate is 2%. If dividends remain at 5 per year forever, what is a fair price? (28.90)

of earnings and invest in a project that will earn 12%. Find the value of assets in place. Find the value of the growth opportunity. Should St

spot is 20%. The risk free rate is 4%. Find the intrinsic value, time value and premium for this call. (5, 7.76, 12.76)
the price of the call if there is equal probability that stock price will grow to 110 or fall to 95. (4.615)
The risk free rate is 2%. Find the futures price for a one year Tbond futures. (952.45)
growth opportunity. Should Stevie Ray buy it? (21.43, -1.24, No)