Sascha owns stock in Lewis Corp and she bought a $5,000 corporate bond. She received $52.50 in quarterly interest from the bond. Sascha also owns stock in Lewis Corp which is worth $46 per share, and it pays a $2 annual dividend. Part A Which is higher, the yield on the stock or the annual interest rate on the bond? Show your work and explain how you determined your solution. Part B If the bond matures in seven years, how much will Lewis Corp have paid Sascha in total? Part C If Sascha owns 1,500 shares of Lewis Corp, how much would she receive in annual dividends?
Sascha owns stock in Lewis Corp and she bought a $5,000 corporate bond. She received $52.50 in quarterly interest from the bond. Sascha also owns stock in Lewis Corp which is worth $46
per share, and it pays a $2 annual dividend.
Part A
Which is higher, the yield on the stock or the annual interest rate on the bond? Show your work and explain how you determined your solution.
Part B
If the bond matures in seven years, how much will Lewis Corp have paid Sascha in total?
Part C
If Sascha owns 1,500 shares of Lewis Corp, how much would she receive in annual dividends?
Part D
If Lewis Corp later offers corporate bonds at an annual interest rate that is one percent higher than half the of the bond Sascha bought, create an equation that models the quarterly interest earned, q, for any given bond face value, v.
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