1) A $1,000 par value bond's annual coupon rate is 4 percent but it pays coupon twice a year. The yield to maturity is 6 percent p.a. and it has 10 years to maturity. If the yield to maturity remains unchanged, what is the price 8 years from now?
2) BBM Co. stock just paid $2.00 dividend per share. The market expects that the dividend will grow at 7% annually for the next 3 year and then 3% anually forever. Assuming a required return of 10%, how much is the present value of stock? (Round to 4 decimal places)
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