Question: 1. Why do intrinsic and market values vary? At what circumstance they might be equal?
2. Explain the three factors that determine the intrinsic, or economic, value of an asset
3. What is the difference between the required and expected rates of return of a common stock?
4. What is the yield to maturity of a bond?
5. (Bond valuation) Bellingham bonds have an annual coupon rate of 8 percent and a par value of $1,000 and will mature in 20 years. If you require a return of 7 percent, what price would you be willing to pay for the bond? What happens if you pay more for the bond? What happens if you pay less for the bond?