FINC 300 FINC300 Assignment 4 (American Public University)

FINC300 FINC 300 FINC/300 Assignment 4

1.  Suppose you have a $1,000 face value bond with 12 years to maturity, a coupon rate of 6% and a yield to maturity of 8%.  If the bond makes semiannual payments, what is it's price today?

2.  Compute the Value of Acme Common Stock if the next dividend is expected to be $1.20 per share.  Investors require a 9% rate of return on stocks with the same risk as Acme.    Based on the dividend growth model, what is Acme's stock worth today?