An annual coupon bond that matures in 14 years sells for $702.88.  It has a face value of $1,000 and a yield to maturity of 7.5 percent.  What is its current yield (CY)?

What is the present value of a security that will pay $11,000 in 5 years if securities of equal risk pay 5 percent annually?

Li & Sons’ common stock currently trades at $55 a share.  It is expected to pay an annual dividend of $1.93 a share at the end of the year (D1 = $1.93), and the constant growth rate is 10.2 percent a year.  What is the company’s cost of common equity if all of its equity comes from retained earnings?

What is the present value of a perpetuity that pays $2,400 per year if the discount rate is 9 percent?

What is the present value of a security that will pay $8,000 in 25 years if securities of equal risk pay 4 percent annually?

Your client is 45 years old, and she wants to begin saving for retirement, with the first payment to come one year from now.  She can save $3,000 per year, and you advise her to invest it in securities which you expect to provide an average annual return of 8 percent.  If she follows your advice, how much money would she have at age 65?

If D1 = $1.25, g (which is constant) = 5.5%, and P0 = $44, what is the stock’s expected total return for the coming year?

Suppose you invest $1,800 today in an account that earns a nominal annual rate (inom) of 16 percent, with interest compounded semiannually.  How much money will you have after 11 years?

Mack Industries just paid a dividend of $1.00 per share (i.e., D0 = $1.00). Analysts expect the company’s dividend to grow 20 percent this year (i.e., D1 = $1.20), and 15 percent next year. After two years the dividend is expected to grow at a constant rate of 5 percent. The required rate of return on the company’s stock is 12 percent. What should be the current price of the company’s stock?

If interest rates fall after a bond issue, the bond’s price will _____.  This change will be more noticeable for _________ bonds.