9. U.S. Government bond was quoted at 92:12 \"bid\" and 92:16 \"asked\". How muc

Question

9. U.S. Government bond was quoted at 92:12 "bid" and 92:16 "asked". How much would you have to pay for one of these $1,000.00 face value bonds?

10. During the past 20 years, Saturn's common stock dividends have grown from $0.18 to $1.86. If the past growth of dividends is expected to continue at the same rate in the future, what is the current value of Saturn's common stock to an investor who requires an 18% rate of return?

11. P&G Corporation’s bond carries a 8.75 percent coupon, pays interest annually, and has 17 years to maturity. What is the bond's yield to maturity to the investor if the investor purchases the bond at the price $1062.50?

12. Twenty years ago, Elle Inc. began manufacturing and selling coin-operated arcade games. Dividends are currently $5.50 per share, having grown at a 8 percent compound annual rate over the past 12 years. That growth rate is expected to be maintained for the next 2 years, after which dividends are expected to grow at half that rate for 2 years. Beyond that time, Elle's dividends are expected to grow at 2 percent per year. What is the current value of a share of Elle common stock if your required rate of return is 12%?

Explanation / Answer

Answer:

Calculation of amount to be paid for purchase of bond :

Using Bid rate :

$1000 * 92 /12 =$7666.67

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