Please show the work. 1. A stock is expected to pay $0.90 per share every...
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Please show the work.
1. A stock is expected to pay $0.90 per share every year indefinitely. If the current price of the stock is $18.60, and the equity cost of capital for the company that released the shares is 7.9%, what price would an investor be expected to pay per share five years into the future?
A. $18.22
B. $19.36
C. $11.39
D. $18.79
2. A $5,000 bond with a coupon rate of 5.1% paid semiannually has ten years to maturity and a yield to maturity of 6.7%. If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price of the bond?
A. fall by $277.36
B. rise by $277.36
C. fall by $332.83
D. rise by $332.83
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