#1 (Bond Evaluation) A $1,000 face value bond has a remaining maturity of 10 years and a
required return of 9%. The bond s coupon rate is 7.4%. What is the fair value of this bond?
#2 (Yield to maturity) New Jersey Lighting has a 7% coupon bond maturing in 17 years. The
current market price of the bond is $975. What is the bond s yield to maturity?
#3 (Constant growth model) The current dividend for Birmingham Electric is $2.40 and is growing at 5% annually. If the required return is 13%, what is the value of one share of stock?
(Realized return) Tie Su bought $5,000 worth of stock 22 months ago. The firm has paid
no dividends since he bought the stock. The stock is currently worth $5,680. What is Tie s
(Required return) According to the CAPM, what would be the required return on an asset
that has a beta of 1.35 when the expected return on the market portfolio is 12% and the
riskless return is 7%?