Part BCaricom Investments also has outstanding bonds with a coupon rate of 6.5% paid semi-annually. The bonds have a par value of $1,000 and a current selling price of 105% of the parvalue. The bonds will mature in 15 years.Required:i.ii.Calculate the Yield to Maturity of the bond.Calculate the Current Yield of the bond.a) North Industries is a constant growth company whose last dividend was $5.50 andwhose dividend is expected to grow indefinitely at a 5.25% growth rate. The company'srequired return is 18.25%.Required: Calculate the current stock price of North Industries.b) Ira Industries just paid a of dividend $6.25. The current share price is $45, and thecompany plans to increase future dividends by 5.05% per year.Required: Calculate the required rate of return on this share.

Yield to maturity is the annual return a bond holder receives if the held the bond until maturity.…

Answered: Required: i. ii. Calculate the Yield to…

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Required: i. ii. Calculate the Yield to Maturity of the bond. Calculate the Current Yield of the bond.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 15P

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Question

Part B
Caricom Investments also has outstanding bonds with a coupon rate of 6.5% paid semi-
annually. The bonds have a par value of $1,000 and a current selling price of 105% of the par
value. The bonds will mature in 15 years.
Required:
i.
ii.
Calculate the Yield to Maturity of the bond.
Calculate the Current Yield of the bond.
a) North Industries is a constant growth company whose last dividend was $5.50 and
whose dividend is expected to grow indefinitely at a 5.25% growth rate. The company's
required return is 18.25%.
Required: Calculate the current stock price of North Industries.
b) Ira Industries just paid a of dividend $6.25. The current share price is $45, and the
company plans to increase future dividends by 5.05% per year.
Required: Calculate the required rate of return on this share.

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