1. A stock is expected to pay a $4.75 dividend next period. Dividends are expected to grow at a constant rate of 8.6%. If the required return of the stock is 18.0%, what will the intrinsic value of the stock be in 9 periods, just after the 9th dividend is paid?
2. Your best friend wants to purchase a corporate bond making semi-annual coupon payments. What will the market price be for a $10,000, 6% bond that matures in 10 years and pays semi-annually if the yield to maturity on bonds of similar risk and maturity is 5.4%?
a. $10,454.43
b. $10,458.96
c. $10,000.00
d. $9,553.68