# Consider the following bond issues: Bond A: 5% 15-year bond Bond B: 5% 30-year bond Neither bond has an embedded option. Both bonds are trading in the market at the same yield. Which bond will ﬂuctuate more in price when interest rates change? Why

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 If you can purchase a municipal bond which returns 5.6% Municipal Bond not tax and you are in the 25% tax bracket, what rate of Corporate are taxed return would you require on a corporate bond? TEY= Municipal Rate/ (1 - Tax rate)

7.47%

=5.6%/(1-25%)
TEY= 5.6%/ (1 - 25%)
Municipal has lower interest rate
Analysts have forecasted Gamemasters will grow at a rate of
8% into the future. Gamemasters recently paid a dividend of \$2.15
and investors require a return of 14.5%. What is the value of this
stock?
p0= Dividend * (1+ Grow rate)/(Interest-Grow rate)

35.72307692

=2.15*(1+8%)/(14.5%-8%)
You are interested in a fast-expanding company that is currently
growing at a rate of 30% and is expected to continue to grow
at that rate for another three years before slowing down to a
rate of 7.5%. If investors expect a return of 12% and the
company recently paid a dividend of \$1.75, what is the
value of the stock?
(1+I)^nDiv(0)\$1.75 I+GCF(1)DiscountDCFG130% 1.30 2.28 =1.75*D291.12 =(1+12%)^1 2.03 =E29/G29G27.50% 1.30 2.9575=E29*D301.2544=G29^22.357700893=E30/G30i12% 1.30 3.84 =E30*D311.404928 =G29^3 2.74 =E31/G3191.84680556=B341.404928=G3165.37474202=E32/G32Stock

72.50 =SUM(I29:I32)91.84680556

What is the years to maturity on a bond issued November 1, 2001, and due November 1,
65.50
=NPV(12%,E29,E30,E31,E32)

5 years11/1/202111/2/20165.0000

What is the price of a zero coupon bond that was issued for \$1,000 and
matures in 14 years if the market interest rate is 9%? (Calculate as semi-annual)
rate0.045=9%/2nper 28.00 =14*2pmt0%pv

(\$291.57)

=PV(B44,B45,B46,B48)
fv\$1,000.00
The Dow Jones closed at 18,641 on November 2, 2016 which was up 311 points
from the day before. What was the percentage change?
% change= New-Old/Old
18,330.00=18641-311

1.70%

=(18641-18330)/18330
Dell Computers reported earnings per share to be \$5.85 this year. If the
company P/E ratio is 28, what is the price of the stock?
Price= P/E*EPS

163.80=5.85*28

A TIPS bond was issued with a CPI of 122.69 and a coupon of 6.5%.
One year later the CPI is 128.32. What is the par value of the bond
and how much interest will be paid (assume semi-annual interest).
CPI start122.69CPI end128.32coupon 6.50%
Value of bond =Before 1000 (bonds always 1000)

Par 1,045.89

=1000* 128.32/122.69

Interest 33.99136034

=B73*6.5%/2
What is the current yield on a bond quoted at 98.91 if the
bond pays a coupon of 6.54%?
Quote 98.91Price 989.1
=1000*98.91/100
Coupon 6.54%Interest 65.40
=6.54%*1000

Current Yld6.61%

=65.4/989.1
If you buy 200 shares of a stock with bid and ask prices of
\$77.23 and \$77.28, respectively, how much will you pay?
No.200Price\$77.28

Value \$15,456.00

=B88*B89
If Home Depot has an 8.75% preferred stock with a par
value of \$100, what would you pay if the market rate is
6.5%.Dividend \$8.75Market rt 6.50%

value \$134.62

Div/martk
You own a callable bond that pays 10% annual coupon
and it has a one-year interest penalty if it is called early.
If it is called early, how much will you receive?
Coupon 10%Pay \$ 1,100.00
=1000*(1+10%)