Part 1: Wine and Roses, Inc. offers a 7% coupon bond with semiannual payments an

Question

Part 1: Wine and Roses, Inc. offers a 7% coupon bond with semiannual payments and a yield to maturity of 7.73%. The bonds mature in 9 years. What is the market price of a $1,000 face value bond? $1,108.16 $1,401.26 $953.28 $963.88 $1,401.86 Part 2: Majestic Homes' stock traditionally provides an 8% rate of return. The company just paid a $2 a year dividend which is expected to increase by 5% per year. If you are planning on buying 1,000 shares of this stock next year, how much should you expect to pay per share if the market rate of return for this type of security is 9% at the time of your purchase? $57.89 $55.13 $70.00 $52.50 $48.60

Explanation / Answer

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