- Description
FIN 370 Week 3 Risk and Return Problem Sets
Complete the following problem sets from Chapter 7 in Microsoft® Excel®:
- 7-21
- 7-27
Complete the following problem sets from Chapter 8 in Microsoft® Excel®:
- 8-19
- 8-21
Complete the following problem sets from Chapter 9 in Microsoft® Excel®:
- 9-33
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7-21 Compute Bond Price Compute the price of a 3.8 percent coupon bond with 15 years left to maturity and a market interest rate of 6.8 percent. (Assume interest payments are semiannual.) Is this a discount or premium bond? (LG7-4)
7-27 Yield to Maturity A 5.65 percent coupon bond with 18 years left to maturity is offered for sale at $1,035.25. What yield to maturity is the bond offering? (Assume interest payments are semiannual.) (LG7-6)
8-19 Value a Constant Growth Stock Financial analysts forecast Safeco Corp.’s (SAF) growth rate for the future to be 8 percent. Safeco’s recent dividend was $0.88. What is the value of Safeco stock when the required return is 12 percent? (LG8-5)
8-21 Expected Return Ecolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent rate. At a current stock price of $44.12, what is the return shareholders are expecting? (LG8-5)
9-33 Risk, Return, and Their Relationship Consider the following annual returns of Estee Lauder and Lowe’s Companies:
Estee Lauder | Lowe’s companies | |
Year1 | 23.40% | -6% |
Year2 | -26% | 16.10% |
Year3 | 17.60% | 4.20% |
Year4 | 49.90% | 48% |
Year5 | -16.80% | -19% |