Question: 1) Zero coupon bonds: Ten-year zero coupon bonds issued by the U.S. Treasury have a face value of $1,000 and interested is compounded semiannually. If similar bonds in the market yield 10.5 percent, what is the value for these bonds?
2) Zero growth: Nynet, Inc., paid a dividend of $4.18 last year. The company does not expect to increase its dividend for the next several years. If the required rate of return is 18.5 percent, what is the current price of the stock?
3) Zero growth: Knight Supply Corp. has not grown for the past several years and expects this lack of growth to continue. The firm last paid a dividend of $3.56. If you require a rate of return of 13 percent, what is the current stock price?