Question:
1. Trevor Price bought 10-year bonds issued by Harvest Foods 5 years ago for $982.79. The bonds make semiannual coupon payments at a rate of 8.4 %. If the current price of the bonds is $1,061.13, what is the yield that Trevor could earn by selling the bonds today?
2. The First Bank of Ellicott City has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on this stock. Determine current price of this preferred stock given a required rate of return of 11.5 percent?