1. The ordinary shares of OLO Ltd are expected to pay a dividend of $1.00 at the end of year 1 and market analysts expect the dividend to grow at 15% p.a. for the next three years before the growth rate drops to 5% p.a. for the forseeable future. If the expected return on these shares is 15% their price today is closest to:
a) $9.10
b) $12.60
c) $14.10
d) $16.00
2. Ninety days ago, you purchased a 180-day treasury bill with a face value of $100,000. At that time, the yield to maturity on the bill was 6.0% p.a. The current yield to maturity on the bill is 5.0% p.a. The price of the bill today is closest to:
a) $97,126
b) $97,594
c) $98,542
d) $98,782