1. New companies stock currently sells for 17.50 a share. It just paid a dividend of 1.00 a share. The dividend is expected to grow at a constant rate of 6.25 a year. What stock price is expected one year from now?
2. The bank forecasts the following one-year interest rates one, two, and three years in the future: 4.25%,4.80%, and 5.00%. The current one-year interest rate is 4.20%. Estimate the annual four-year interest rate using the Expectations theory.
3. The 9-year spot interest rate is 6.3% and the 6 year spot interest rate is 6.5%. What is the implied forward rate on a 3-year bond irginating 6 years from now?
Forward rate (annual): _____________%