Problem 1. What is the yield-to-maturity of the following bond (payments are made semiannually:
Par Value (value at maturity): 10000
Annual Coupon: 7.8%
Maturity: 10 years
Current Market Value: $8,750
Problem 2. What should be the current market value (present value) of a preferred stock that pays an annual dividend of $10 and has a required rate of return of 10.3%?
Problem 3. What should be the market value (present value) of the following bond with semiannual payments that has a yield-to-maturity (i.e. required rate of return or discount rate) of 8.6%?
Par Value (value at maturity): 50000
Annual Coupon: 5.3%
Maturity: 15 years
Problem 4. Refer to the MNO Stocks price data below:
Market Value
January 1, 2002 $10.00
January 1, 2003 $5.00
January 1, 2004 $6.50
January 1, 2005 $8.75
For each holding period, MNO paid a $1.00 dividend
What are MNO's three holding period returns?
HPR1 =
HPR2 =
HPR3 =
What is MNO's average return?
What is MNO's Geometric Mean Return?