1. You just bought a 10%, Rs. 1000 bond with 7 year maturity.The interest is payable annually.

How much would you pay for the bond if you required rate of return is (a) 12%; (B) 9%? Ans: (a) Rs. 908.40 (b) Rs. 1050.30 2. At 10%, of the 1000 bond is currently selling for Rs. 950. It has a remaining life of five years. If you required rate of return is 11%, will you buy the bond? Assume that interest is payable (a) annually, (b) semi-annually. 3. A company has issued a 12%, Rs. 1000 bond repayable after 10 years, at 10% premium. You required rate of return is 13%. Will you buy the bond if interest is payable (a) annually, (b) semi-annually. Ans: (a) Rs. 975.62 (b) 4. A zero interest bond of Rs. 1000 will pay Rs. 2500 after seven years. What is the bonds yield? 5. At 10%, Rs. 1000 bond is selling for Rs. 900. It has a remaining life of 8% what is the bonds yield to maturity? 6. A company expected dividend next year Rs. 5 per share. The dividend is expected to grow at 8% per annum forever. The equity capitalisation rate is 12%. What should be the value of the companys share? 7. Share is currently selling for the 120. The expected dividend after a year is 12. The perpetual dividend growth rate is expected to be 8%. What is the equity capitalisation rate? 8. PQ Ltd paid a dividend of Rs. 10 per share it is expected to grow at 8% for five years and 4% thereafter, for ever. Calculate the price of the share if the equity required rate of return is 10%. 9. Youve got a share of rupees hundred a year ago during the year, you receive a dividend of Rs. 6. The share is now selling for Rs. 1.20. What is your dividend yield and capital gain? 10. Are companies current price of share is rupees hundred and the expected dividend per share is rupees a. If its capitalisation rate is 15% what is the dividend growth rate?