1. A bond has a $1,000 par value, fourteen years to maturity, and pays a coupon of 6.25% per year, semiannually. If the bond’s required return is 5.8% per year, what is its value?
1) $1,038.74
2) $1,035.64
3) $1,048.53
4) $1,046.55
5) $1,042.74
2. A stock’s last dividend was $1.18 per share and the dividends are expected to grow forever at a constant rate of 5.8% per year. If the stock’s current price is $23.76 per share, what is the stock’s intrinsic value per share expected to be in five years?
1) $29.42
2) $30.93
3) $31.51
4) $32.92
5) $28.30