1) Assume that the nominal interest rate is 14%, the risk premium is 4% and real interest rate rate is 3%, find inflation rate and the risk free interest rate
2) Assume that a company issued a bond with $1,000 face value, 10% coupon rate, 20 years maturity, if this bond is sold after 5 years, how much this bond will be sold if the yield to maturity (YTM) is 8%? What is the current yield?
3) Assume that a company issued a semi-annual bond with $1,000 face value, 10% coupon rate and 15 years maturity. If the bond is sold in the 10th year, how much the bond will be selling if the yield to maturity (YTM) is 10%?
4) Assume that a stock is giving $2 dividends and the expected rate of return is 10%, How much the stock price will be selling today?
5) Assume that a company issued as stock that offers $2 dividends today. If dividends are growing at 5% per year, and the expected rate of return is 7%, how much the stock price will be selling today? 5 years from now?