1. If the yield-to-maturity of a bond is lower than the coupon rate, the bond will sell at:
a) a premium
b) a discount
c) par valule
d) its call price
2. ABC Inc. has issued twenty-year semiannual coupon bonds with a face value of $1,000. If the annual coupon rate is 10% and the current yield to maturity is 9%, what is the firm's current price per bond?
a) $578.82
b) $905.35
c) $1,092.00
d) $1,103.19
3. Given the following information, calculate the price paid for this common stock:
Expected dividend growth rate= 3%
Next expected dividend payment= $2.8
Required rate of return= 9%
a) $40.00
b) $46.67
c) $48.07
d) $56.13