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What is MNO's average return? What is MNO's Geometric Mean Return?

1. What is the yield-to-maturity of the following bond (payments are made semiannually:
Par Value (value at maturity): 10000
Annual Coupon: 7.8%
Maturity: 10 years
Current Market Value: $8,750

2. What should be the current market value (present value) of a preferred stock that pays an annual dividend of $10 and has a required rate of return of 10.3%?

3. What should be the market value (present value) of the following bond with semiannual payments that has a yield-to-maturity (i.e. required rate of return or discount rate) of 8.6%?
Par Value (value at maturity): 50000
Annual Coupon: 5.3%
Maturity: 15 years

4. Refer to the MNO Stocks price data below:
Market Value
January 1, 2002 $10.00
January 1, 2003 $5.00
January 1, 2004 $6.50
January 1, 2005 $8.75

For each holding period, MNO paid a $1.00 dividend

What are MNO's three holding period returns?

HPR1 =

HPR2 =

HPR3 =

What is MNO's average return?

What is MNO's Geometric Mean Return?

Solution Summary

Process and computations illustrated.

$2.19