Problem
1. A bank accepted bill (BAB) has a face value of $1,000,000 and will be mature in 165 days. If this BAB is currently trading at $957,000, how much is its implied yield?
2. LXLJ Ltd. has issued a 7-year zero-coupon bond with face value $1,000. What is the fair price of the bond if the yield to maturity is 6.9 percent per annum?
3. DEF Ltd just paid a dividend of $3.5 per share. Investors expect DEF will keep on paying the same amount of dividend every year forever. If the required rate of return is 8.5 percent per annum, what is the fair value of a DEF share today?