Session 7 homework_Chapters 8 and 9_UMUC_FIN615

Session 7 homework_Chapters 8 and 9_UMUC_FIN615 - Required...

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Single-Stage Growth Data Stock Price $24.00 $1.25 Growth Rate 8% Required Return 15% Two-Stage Growth Data Stock Price $24.00 $1.25 Growth Rate 1 20% Growth Rate 2 8% Rapid Growth Time 3.00 years Required Return 15% Three-Stage Growth Data Stock Price $24.00 $1.25 Growth Rate 1 20% Growth Rate 2 8% Rapid Growth Time 3.00 years Transition Period 5.00 years Required Return 15% Valuation Single-Stage $19.29 Two-Stage #MACRO? Three-Stage #MACRO? D 0 D 0 D 0
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Bond A Bond B Settlement Date 12/15/2007 12/15/2007 Maturity Date 4/15/2014 6/15/2025 Coupon Rate 5.00% 9.50% Price $890.00 $1,040.00 Face Value $1,000.00 $1,000.00
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Unformatted text preview: Required Return 7.25% 8.75% Frequency 2 2 Intrinsic Value $887.24 $1,066.56 Under/Over Valued Overvalued Undervalued Accrued Interest $8.33 $- Yield to Maturity 7.19% 9.04% Duration 5.40 9.12 % Change in Price Change in Yields Bond A Bond B-2.00% 10.85% 23.07% 2.00%-10.16%-13.24% If rates are going to fall, we would rather own Bond B because it has a longer duration and will gain more than Bond A. If rates are going to rise, we would rather own Bond A because it has a shorter duration and will lose less....
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This note was uploaded on 07/24/2009 for the course FIN FIN taught by Professor Robbani during the Summer '09 term at University of Maryland Baltimore.

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Session 7 homework_Chapters 8 and 9_UMUC_FIN615 - Required...

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