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  1. business
  2. accounting
  3. 2. a bond has an ytm of 12 percent and a coupon of

2. A bond has an YTM of 12 percent and a coupon of 11 percent....

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Accounting

2. A bond has an YTM of 12 percent and a coupon of 11 percent. Explain carefully whether this bond would sell for a discount or premium and why.
3. A stock is expected to pay a dividend of $2 today. This dividend is expected to grow at 3 percent for years 1 to 3, then at 2 percent for years 4 to 7, after which it will grow at 1 percent forever.
What is the earliest period that you can calculate the future selling price you need to find the price of this stock today? Explain fully. (Note that I am NOT asking you to calculate the stock price but just asking about the period).
4. Project X has a 10 percent IRR and Project Y has a 15 percent IRR. Both projects have a required return (based on risk) of 13 percent. "We should pick Project Y as it has a higher IRR". Discuss fully.
5. Project A has a payback period of 2.5 years while Project B has a payback period of 3 years. Given these numbers we should pick Project A if the projects are mutually exclusive". Discuss fully.

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