Great Pumpkin Farms just paid a dividend of $4.50 on its stock. The growth rate in dividends is expected to be a constant 7.5 percent per year indefinitely. Investors require an 18 percent return on the stock for the first three years, an 11 percent return for the next three years, and 12 percent return thereafter. What is the current share price of the stock?

Alex's firm is fast growing. Therefore, it will pay no dividend for the next 5 years. After that, Alex's firm will initiate dividend payment. The first dividend will be $2 (at the end of the 6^th year) and the dividend will grow at a rate of 5% for 10 years. Then the industry starts to stabilize, and Alex'ss firm will pay $3 forever. If the required rate of return is 10%, calculate the stock price.

ABC company. paid a dividend of $2 on its stock. The growth rate of dividends is expected to be a constant 4 percent per year, indefinitely. Investors require an 12 percent return on the stock for the first year, a 11percent return in the second year, a 10 percent return for the next four years and an 9 percent return thereafter. What is the current price for the stock?

[The following information applies to the questions displayed below.]

Christmas Anytime issues $650,000 of 5% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.

   Calculate the issue price of a bond and complete the first three rows of an amortization schedule when:

The market interest rate is 6% and the bonds issue at a discount.

Universal Laser, Inc., just paid a dividend of $3.35 on its stock. The growth rate in dividends is expected to be a constant 4 percent per year indefinitely. Investors require a return of 16 percent on the stock for the first three years, a return of 14 percent for the next three years, and then a return of 12 percent thereafter. What is the current share price for the stock?

Assume a consumer lives for two periods. His income and consumption in the two periods are Y₁ and C₁, and Y₂ and C₂ respectively. Ignore price level changes and further assume that this consumer saves income (S) in the first period and this saving earns interest. With consumption in two periods being constrained by income in the two periods derive the intertemporal budget constraint.

***IN JAVA***

5. Currency conversion: Write a snippet that first asks the user to type

  today's US dollar price for one  Euro. Then use a loop to:

-- prompt the user to enter a Euro amount. (allow decimals)

-- convert that amount to US dollars. (allow decimals)

-- print the amount to the screen, formatted to two decimal places

Use 0 as a sentinel to stop the loop.

Suppose you want to establish a bullish spread strategy. The are two call options. The first one has X1=$50 and C1=$5. The second one has X2=$40 and C2=$6.

When the underlying asset price is S(t)=$45, what is the profit from the strategy?

What is the maximum profit of the strategy?

What is the minimum payoff of the strategy?

Consider the following bond:
Coupon rate: 11% per annum
Maturity: 18 years
Par value: RM1,000
Bond Value: RM1169.00
Compounding: Semiannually
First par call in 13 years
Only put date in five years and putable at par value

Suppose that the market price for this bond RM1,169.

a) Estimate and interpret the current yield for the bond. (5 marks)
b) Calculate the yield to maturity for this bond. (5 marks)
c) Compute that the yield to first par call. (5 marks)
d) Find the yield to put. (5 marks)
e) Suppose that the call schedule for this bond is as follows:
Can be called in 8 years at RM1,055
Can be called in 13 years at RM1,000
And suppose this bond can only be put in five years and assume that the yield to first par call is 8.535%. Calculate yield to worst for this bond. (5 marks)