1 a bond has an 8 annual coupon and a 75 yield to maturity, Ask an Expert

Finance

1. A bond has an 8% annual coupon and a 7.5% yield to maturity. Which of the following statements is CORRECT?

If the yield to maturity remains constant, the price of the bond will decline over time.

The bond sells at a price below par.

The bond sells at a discount.

2. New Gadgets, Inc., currently pays no dividend but is expected to pay its first annual dividend of $5.60 per share exactly 9 years from today. After that, the dividends are expected to grow at 3.3 percent forever. If the required return is 12.7 percent, what is the price of the stock today??

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92824414

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