Question 1
Solution
Bond A
Face value (PV) = $60,000
Maturity= 20 years
Fv= $43200+$36,000=$79,200
Bond B
Face value= $60,000
Maturity= 20 years
Coupon= 0
R= 12% compounded semiannually
Question 2
Solution
Maturity= 18 years
C= 9% semiannually
Par value= $1,045
Question 3
Solution
DPS0=$77
R=9.2%
G=2.6%
Question 4
Solution
DPS0= 1.50
DPS1=
DPS2=
DPS3= 1.53*(1(0.150.05) =$1.377
Question 5

Solution
Current price= $25
DPS= $ 0.50
G= 3%
Quarterly payments
Effective Annual Interest Rate
Current gains yield
Dividend yield

Solution
Constant quarterly dividends
P0=$25
P1=?

Solution
_{ }
k = 5.16%
0123 Years

g_{s} = 0%
g_{s} = 3%/4
g_{n} = 3%/4

_{ }0.50 _{}0.500.5040.508
P_{0}=?= 23.52=
CF_{t}0 _{}0.50 24.02
Calculation

Solution
k = 5.16%
_{ } 0 123 Years
g_{s} = 8%/4
g_{s} = 5%/4
g_{n} = 3%/4
_{ }  
_{ }0.50 0.51 0.51640.52
P_{0}=?= 24.0741=
CF_{t}0 _{}0.51 24.59
Calculation

Solution
References
Investopedia, LLC (2011). Advanced Bond Concept:Bond Pricing. Available athttp://www.investopedia.com/advancedconcept/bond_pricingRetrieved [16th November 2015].
Menezes, R. (2002). Finance: How to DetermineExpected Market Value of Stock. Available athttp://finance.zacks.com/determiningexpectedmarketvaluestock7645.htmlRetrieved [16th November 2015].