FIN300 test2 review - SI cfw collaborative peer-led structured groupstudy FIN300 TEST2 REVIEW Bonds Inflation and Stocks 1

FIN300 test2 review - SI cfw collaborative peer-led...

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This material is produced by the SI Program at Arizona State University student success { collaborative peer-led structured groupstudy SI FIN300 TEST2 REVIEW Bonds, Inflation, and Stocks 1. Rechette Corp. has 18-year bonds outstanding (par=$1000). These bonds, which pay  semiannual coupons, have a coupon rate of 10% and a yield to maturity of 8%.  a. Compute the bond’s current price. b. Is the bond selling at a discount or premium? Explain.  2. Kim Sundaram recently bought a 20-year zero-coupon (par=$1000) which compounds  interest annually. If the current market rate is 7.75%, what is the maximum price he  should have paid for the bond?  3. The total required rate of return is 23%. Ninex Corp. will pay an end-of-year dividend of 
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  • Fall '08
  • Olander
  • Corporate Finance, Phoenix, Arizona, Pacific-10 Conference, Tempe, Arizona, total required rate

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