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Risk and Return Problem Sets (2)
$ 12.00
Risk and Return                                          
7-27 Yield to Maturity A 5.65 percent coupon bond with 18 years left to maturity is offered for sale at $1,035.25. What yield to maturity is the bond offering? (Assume interest payments are semiannual.)      
7-21 Compute Bond Price Compute the price of a 3.8 percent coupon bond with 15 years left to maturity and a market interest rate of 6.8 percent. (Assume interest payments are semiannual.) Is this a discount or premium bond?   
8-19   Value a Constant Growth Stock Financial analysts forecast Safeco Corp.’s (SAF) growth rate for the future to be 8 percent. Safeco’s recent dividend was $0.88. What is the value of Safeco stock when the required return is 12 percent? 
8-21   Expected Return Ecolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent rate. At a current stock price of $44.12, what is the return shareholders are expecting?    
9-33  Risk, Return, and Their Relationship Consider the following annual returns of Estee Lauder and Lowe’s Companies:                      
  Estee Lauder Lowes companies                                        
Year 1 23.40% -6.00%                                        
Year 2 -26 16.1                                        
Year 3 17.6 4.2                                        
Year 4 49.9 48                                        
Year 5 -16.8 -19                                        
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