Hi Im asking for question number 12. Please provide me explanations in detail fo

Question

Hi Im asking for question number 12.

Please provide me explanations in detail for me to understand it..... my exam is next week.

A zero coupon bond that matures in a year from now is priced at $950 while a two-year zero coupon bond is selling for $900. Determine the price of a two-year 10% coupon bond if the coupon is paid out oncc a year. Suppose that you expect Carrefour SA to pay a 1.10 dividend nextyear You expect the price of CA stock to be 53.55 in one year. The required rate of return for CA stock is 9 percent. What is your estimate of the value of CA stock?

Explanation / Answer

Answer for 13.

Stock Price = (Dividends Paid (Div) + Expected Price (P1)) / (1 + Expected Return (R))

= 1.10 + 53.55 / (1+0.09)

Value of CA stock = 50.137

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