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 .asu.edu { 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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