FIN 501 Week 2 Assignment Help | Trident University
- trident-university / FIN 501
- 06 Feb 2021
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FIN 501 Week 2 Assignment Help | Trident University
Module 2 - Case
STOCK AND BOND
VALUATION
Before starting on this
assignment, make sure to thoroughly review the required background materials.
This assignment will require you to use the various discounted cash flow
methods and dividend models to make computations. In addition to knowing the
computational steps involved in stock and bond valuation, make sure you also
understand the basic concepts.
Submit your answers as
a Word document. Make sure to show your work for all quantitative questions,
and make sure to fully explain your answers using references to the background
readings for any conceptual questions. Questions 1 and 3 will require Excel, so
submit an Excel file that shows your computational steps as a separate file in
addition to your Word file. Question 4 is purely conceptual, no computations
are necessary but make sure to apply and reference concepts from the required
readings in your answers to each of the scenarios.
Case Assignment
1. Suppose you buy a bond that will pay
$1000 in ten years along with an annual coupon payment of $50 and the interest
rate is 4%. Answer the following questions:
A. What is the value of this bond?
B. Now suppose the bond has no coupon
payments (it is a “zero coupon” bond) but still pays $1000 in ten years. What
is the value of this bond?
C. What would happen to the value of the
bond if the inflation rate unexpectedly goes up? What the bond value increase
or decrease?
D. Now suppose the bond still pays an
annual coupon of $50 but the interest rate drops to 2%. What is the new value
of this bond?
2. The XYZ Corporation pays a dividend of
$1 for each share and its required rate of return is 8%. Answer the following
questions:
A. Assuming zero growth in dividends, what
is the value of each share?
USA 
India