Question

Question 39 - 44: Suppose the spot rates for government bonds with maturities of one, two and three years are given by $s_1 = 5\%, s_2 = 7\%$ and $s_3 = 8\%$. What can you infer about the yield-to-maturity of a three year pure discount bond issued by the government? (a) 6.659% (b) 6.667% (c) 8% (d) Given the information, one cannot infer anything about the yield-to-maturity. Question 45 - 50: Consider a stock whose dividend at the end of this year (2016) is $1.40. Its dividends are set to grow by 2% for the next year (2017), before dividend growth drops to 1% (2018 and later). The required rate of return is given by 5%. What is the price for the stock based on a discounted cash flow model? (a) $35.01 (b) $35.33 (c) $35.56 (d) $36.36

          Question 39 - 44: Suppose the spot rates for government bonds with maturities of one,
two and three years are given by $s_1 = 5\%, s_2 = 7\%$ and $s_3 = 8\%$. What can you infer about
the yield-to-maturity of a three year pure discount bond issued by the government?
(a) 6.659%
(b) 6.667%
(c) 8%
(d) Given the information, one cannot infer anything about the yield-to-maturity.
Question 45 - 50: Consider a stock whose dividend at the end of this year (2016) is $1.40.
Its dividends are set to grow by 2% for the next year (2017), before dividend growth drops
to 1% (2018 and later). The required rate of return is given by 5%. What is the price for
the stock based on a discounted cash flow model?
(a) $35.01
(b) $35.33
(c) $35.56
(d) $36.36

Question 39 - 44: Suppose the spot rates for government bonds with maturities of one,
two and three years are given by s1 = 5%, s2 = 7% and s3 = 8%. What can you infer about
the yield-to-maturity of a three year pure discount bond issued by the government?
(a) 6.659%
(b) 6.667%
(c) 8%
(d) Given the information, one cannot infer anything about the yield-to-maturity.
Question 45 - 50: Consider a stock whose dividend at the end of this year (2016) is 1.40.
Its dividends are set to grow by 2% for the next year (2017), before dividend growth drops
to 1% (2018 and later). The required rate of return is given by 5%. What is the price for
the stock based on a discounted cash flow model?
(a)35.01
(b) 35.33
(c)35.56
(d) 36.36

Added by Kevin T.

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