4. Dividend discount model Suppose a security pays a current dividend of $5 and all future
dividends will grow at a rate of 8 percent per year forever. Assuming the appropriate discount
rate is 12 percent, what is the value of this security?
6-10 LG 2: Integrative-Expected Return, Standard Deviation, and Coefficient of
k ki Pr i
Rate of Return
ki x Pri
k k iPr i
Asset F .40
23. A bond that is yielding 10% is priced at $950 and has a duration of 7.75 years. If its yield rises to 12%,
the new approximate price is $.
24. A bond that is yielding 12% is priced at $1020 and has a
25. An organization that pools the assets of small investors to purchase a
variety of securities is known as a(n)_.
U. A market where prices fully reflect all available information is
A ECO 110 Principles of Economics I: Microeconomics
*A ECO 111 Principles of Economics II: Macroeconomics
Economics elective 300 level or above where A ECO 110 and 111 are
prerequisites, excluding A ECO 320, 496, and 497
A MAT 106, 111, 112, 113, 11
PART 2 How Markets Work
Demand and Supply
Slide, Rocket, and Roller Coaster
Slide, rocket, and roller coaster—Disneyland rides?
No, they are commonly used descriptions of price changes.
The price of a personal computer took a dramatic slide fr