QUESTION 17 Assume M1000 P9p0 n20 coupon rate9 the approxima

QUESTION 17 Assume M-1000, P-9p0, n-20, coupon rate-9%, the approximate YTM is equal to ??. 9% Ob-10% ?. 9.5% O d. none of the above QUESTION 18 The expected dividend for a common stock on year from now is S3, constant growth rate of dividend is 9%, and discount rate is 14%, the value of the common stock is o a. $17 OC. $60 O d none of the above QUESTION 19 SAVE AND SUBMIT Click Save and Submit to save and submit. Click Save All Answers to save all answers.

Solution

17)

Coupon payment = 0.09 * 1000 = 90

YTM using a financial calculator = 10%

Keys ti use in a financial calculator: PV = -900, FV = 1000, N = 20, PMT = 90, CPT I/Y

18)

Value of stock = D1 / required rate - growth rate

Value of stock = 3 / 0.14 - 0.09

Value of stock = $60