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A2 - of its earnings as dividends and it has a historical...

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ACTSC 371— Corporate Finance 1 Assignment 2 – Due Date Monday June 18 th 4:00pm Question 1: Consider a bond paying 7.5% coupon with 15 years to maturity. (a) Calculate the price of the bond if the desired YTM is 7% (b) Calculate the YTM if the price of the bond is quoted at 102. Question 2: Textbook questions 6.15, 6.24, 6.27, 7.15, 7.25, 7.33 Question 3: Assume XYZ Inc expects to make $5.00 per share this year. XYZ pays 70%
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Unformatted text preview: of its earnings as dividends, and it has a historical ROE of 12%. Assume the market expects a 10% return from investing in XYZ stock. (a) What is XYZ’s expected growth rate in dividends? (b) What is XYZ’s current share price (Assuming the DDM)? (c) The CEO of XYZ believes the stock should have a current P/E ratio of 20. What dividend policy should achieve this?...
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