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

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    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?

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    Solution Summary

    Process and computations illustrated.

    $2.19

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