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QUESTION
XYZ Enterprises has bonds on the market making semiannual payments, with 16 years to maturity. You require a 12% ROI (YTM) and this bond offers 10%...
1. XYZ Enterprises has bonds on the market making semiannual payments, with 16 years to maturity. You require a 12% ROI (YTM) and this bond offers 10% coupon rate assuming $1, 000 “par value”. What should you pay for this bond?
2. What is the relationship between the stock price and its dividends?
3. Differentiate between nominal and real interest rates?
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