1.What is the value of a share of preferred stock that pays a $9.50 dividend, assume k is 12%. 2. A $1,000 corporate bond with 10 years to maturity pays a coupon of 8% (semi-annual) and the market

1.What is the value of a share of preferred stock that pays a $9.50 dividend, assume k is 12%.

2. A $1,000 corporate bond with 10 years to maturity pays a coupon of 8% (semi-annual) and the market required rate of return is a) 7.2% and b) 10%. What is the current selling price for a) and b)?

3.A $1,000 corporate bond with 20 years to maturity pays a coupon of 7% (semi-annual) and the market required rate of return is a) 6.6% b) 13%. What is the current selling price for a) and b)?

4. The following information refers to a six-month call option on the stock of XYZ, Inc.

•Price of the underlying stock: $50.

•Strike price of the three-month call: $45.

•Market price of the option: $10.

a) What is the intrinsic value of the option?

b) What is the option’s time premium at this price?

5.A U.S. Government bond with a face amount of $10,000 with 8 years to maturity is yielding 3.5%. What is the current selling price?

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