1. What is meant by risk/return trade-off? Does this trade-off hold in all markets?
2. Assume the dividend in the next period is $10, the market rate is 12%, and the grow rate is projected at 4%. What is the current value of a share of stock?
3. You purchase a bond with an invoice price of $985. The bond has a coupon rate of 6.9 percent, and there are 3 months to the next semiannual coupon date. The clean price of the bond is $ ______. (Do not include the dollar sign ($). Round your answer to 2 decimal places. (eg., 32.16))