a) Question 3 BMX Investments Limited's bond is currently selling at $1200. It has a...
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a) Question 3 BMX Investments Limited's bond is currently selling at $1200. It has a coupon rate of 10% and a par value a of $1000. It pays annual interest with 15 years to maturity. 1) Calculate the Bond's yield to maturity (6 marks) 2) Use the yield to maturity computed above and the coupon rate, along with the bond's current price and par value to explain the relationship and differences between them. (6 Marks). b) Singer limited common stock currently pays an annual dividend of $3.60 per share with a required return of 12%. If Dividends are expected to grow at a constant rate of 6% what is the current market price of the stock? (5 marks) c) If Genesis Limited common stock pays dividends of $2 per share last year. The stock is expected to grow at 8% per year. i) If the required rate of return is 14%, what is the price of the stock? (5 marks). ii) Explain the difference between stock with no growth and the Gordon's growth model? ( 3 marks)
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