1. A bond has a $1,000 par value, fourteen years to maturity, and pays a coupon of 6.25% per year, semiannually. If the bond’s required return is 5.8% per year, what is its value?

1) $1,038.74

2) $1,035.64

3) $1,048.53

4) $1,046.55

5) $1,042.74

2. A stock’s last dividend was $1.18 per share and the dividends are expected to grow forever at a constant rate of 5.8% per year. If the stock’s current price is $23.76 per share, what is the stock’s intrinsic value per share expected to be in five years?

1) $29.42

2) $30.93

3) $31.51

4) $32.92

5) $28.30