Expert Answers FH18

A5. (Yield to maturity) New Jersey Lighting has a 7% coupon bond maturing in 17 years. The current market price of the bond is $975. What is the bond’s yield to maturity?

A11. (Expected return) Northern States Power has a projected dividend of $3.60 next year. The current stock price is $50.50 per share. If the dividend is projected to grow at 3.5% annually, what is the expected return on Northern States stock?

A16. (Growth rate) Suppose Toshiba has a payout ratio of 55% and an expected return on its future investments of 15%. What is Toshiba’s expected growth rate?

B2. (Yield to maturity) GMAC’s 8.75% bonds closed yesterday at $952.50. If these bonds mature in 11 years, what is the yield to maturity of these bonds? What is their APY?