Financial Data Sets:
1. Compute Bond Price Compute the price of a 3.8 percent coupon bond with 15 years left to maturity and a market interest rate of 6.8 percent. (Assume interest payments are semiannual.) Is this a discount or premium bond?
2. Compute Bond Price Compute the price of a 5.6 percent coupon bond with ten years left to maturity and a market interest rate of 7.0 percent. (Assume interest payments are semiannual.) Is this a discount or premium bond?
3. Value a Constant Growth Stock Financial analysts forecast Safeco Corp.'s (SAF) growth rate for the future to be 8 percent. Safeco's recent dividend was $0.88. What is the value of Safeco stock when the required return is 12 percent?
4. Expected ReturnEcolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent rate. At a current stock price of $44.12, what is the return shareholders are expecting?
5. Risk, Return, and Their Relationship Consider the following annual returns of Estee Lauder and Lowe's Companies:
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Estee Lauder
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Lowe's Companies
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Year 1
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29.4
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-6.0 %
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|
Year 2
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-26.0
|
16.1
|
|
Year 3
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17.6
|
4.2
|
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Year 4
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49.9
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48.0
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|
Year 5
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-16.8
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-19.0
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Compute each stock's average return, standard deviation, and coefficient of variation. Which stock appears better? Why?