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a. Discuss the relationship between the coupon rate and the required rate of return that will cause a bond to be sold at this par value, a discount, or a premium

b. Although debt and equity capital are both sources of external financing used by firms. They are very different in several important respects. What are key differences between debt and equity?

c. Jejarum Corporation builds and maintains public road across the country. They have an outstanding issue of RM1000 par value bonds with an 9% coupon interest per annum. The issue pays interest semi-annually and has 10 years remaining to its maturity dates. If bonds of similar risk are currently earning a 12% rate of return annually, how much should Jejarum Corporations bond sell for today?

d. Assume that a bond with RM1000 par value has a coupon rate of 12% that pays semi-annually and will mature in 3 years. It has a current piece quote of RM940. Given this information, what is the yield to maturity for this bond?

e. Bukit Mahkota Incorporation is considering a cash purchase of Cahaya woods stock. During the year just completed, Cahaya earned RM 4.50 per share and paid cash dividends of RM 2.50 per share (D0=2.30). Cahayas earnings and dividends are expected to grow at 20% per year for the next 2 years, after which they are expected to grow at 5% per year forever. What is the maximum price per share that Bukit Mahkota Incorporation should pay for Cahaya if it has a required return of 12% investment with risk characteristics similar to those of Cahaya?

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