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21-09-2022
Business

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3. Company AFLAC had issued a 15-year coupon bond with 6% coupon rate on the face value as $1,000 and with semi-annual payments. Answer the following questions:
a) Suppose the discount rate for the bond is given as 12%, what is the present value of the bond?

b) Suppose the current market price of the bond is given as $915 per bond, what is the current market discount rate (or so called Yield to Maturity) for the bond?

c) The company also issued a common stock of $0.65 dividend with 10% growth rate. The current common stock price is $14.20/ per share. What is the rate of return for the stock?

Answer :

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