Sishumba Enterprises issued new 10 year bonds on January 1, 2007. The bonds were issued at K1, 000 nominal value and sold at K 1, 782, paying a 12% annual coupon.
i. Calculate the YTM of the bonds on January 1, 2012.
ii. Calculate the bond’s price and current yield on January 1, 2015, 8 years later, assuming interest fell to 7%.
iii. Suppose these bonds were callable, attracting a 10% premium. Calculate the YTC if the bond was called on January 1, 2013.
e) A company has just paid a K2.00 dividend per share and dividends are expected to grow at a rate of 6% indefinitely. If the required return is 13%, what is the value of the stock today?
f) Stock CBC last paid a dividend of K1.03. Dividends are expected to grow at 5% forever, with an expected return on the market is 11%, a 0.8 beta and a risk-free rate of return is 5%. Find the value of a stock.