Q3. You are told that a Corporate Bond has four years to maturity, pays a...
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Q3. You are told that a Corporate Bond has four years to maturity, pays a 7% coupon & is currently trading with a Yield to Maturity of 5.0%. This being the case, what is the price of the Bond in the market? Show your workings
Q4. A listed Company has a Beta of 1.5. A local Risk-Free Rate is 2.0% & the appropriate Equity Risk Premium is 5.0%.
A. What is the required rate of return on this Equity? Show your workings
B. If this Company paid out a $6.00 Dividend what would be fair value (to the nearest $) for the Companys share price under a zero growth Dividend Discount Model?
C. If the Company in fact grew its Dividend at 4% per year what would fair value per share be under that scenario (to the nearest $)?
Need answers of two.
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