Stock and Bond questions
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11. What is the yield-to-maturity of the following bond? WHY?
Price = 113
Discount Rate Present Value of Cash Flow of Bond
6% 120
8% 114
9% 112
10% 98
12. What is the return on the following investment?
Income = $400
Price t=0 = $3000
Price t=1 = $4000
13. Given the following information, calculate the Price of the stock.
g = 8%
r = 9%
d(1) = $4
14. Given the following data, calculate the price earnings ratio for the stock,
g = 8%
r = 9%
Payout ratio of earnings = 40%
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Solution Summary
The solution explains the calculation of yield to maturity, return on investment, price of stock and price to earnings ratio
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11. What is the yield-to-maturity of the following bond? WHY?
Price = 113
Discount Rate Present Value of Cash Flow of Bond
6% 120
8% 114
9% 112
10% 98
The yield-to-maturity (YTM) of a bond is the discount rate which will make the present value of the cash flow of the bond equal to the price today. The price today is 113. At ...
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