The market requires an interest rate of 8 on bonds of this


1. What is the percentage return on a stock that was purchased for $40.00, paid a $3.00 dividend after one year and was then sold for $39.00?

2. Consider a bond which pays 7% semi-annually and has S years to maturity. The market requires an interest rate of 8% on bonds of this risk. What is this bond's price?

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Financial Management: The market requires an interest rate of 8 on bonds of this
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