1. A Common stock of General Motors closed at $38.16 today 7/03/19 The company paid $0.40 last quarter and the
growth rate is expected to be 5.5%. What will be the investor’s price assuming she has a required rate of 9.5%? What would be the yield the yield on the investment based on an annual (4x$0.40) dividend? Would she buy, sell, or hold if she is interested in trading for a profit? Explain fully.
2. ATT 10-year bonds paying 8% currently sells for 0.96 which is equivalent to $960 in dollar terms.
a. What is the current yield?
b. What is the yield to maturity?
c. What is the investor’s price assuming she is requiring 11% return
d. Would she invest in the bond? WHY?__________________