Business Finance

Business Finance
Contents
1

Contents...........................................................................................................................................2
QUESTION1...................................................................................................................................3
QUESTION 2..................................................................................................................................3
QUESTION 3..................................................................................................................................3
QUESTION 4..................................................................................................................................4
QUESTION 5..................................................................................................................................4
REFRENCES...................................................................................................................................6
2

QUESTION1
Coupon payment of the bond: It is the interest rate which is received by bond holders from
bond issue unit maturity date of a bond.
I = 10.5 % per annum = 5.25 %
1000*5.25 % = Semi annually for 20 years.
Present value of bond = PV of interest rate + PV of bond maturity amount= 52.5%
QUESTION 2
A)Relation between share price and investor require rate: Both have positive relation if the
share price value has been increase then the investor interest rate is increase and vice
versa.
B) Share price and dividend growth h have positive as well as negative relation depend on the
situation. It after the declaration of dividend market factor increases then the pie of shares
will be increase (Reisel, 2014).
C) D1 = 3.25
G = 5.1%
R = 1%
D1/(r-g) = 3.25/ 5.9 % = 55
D)K = 2.85/ 77.32*100 = 3.68%
QUESTION 3
Arithmetic average return = R1+R2+R3+R4/Number of years
10.5+12.2-5.5+2.8 = 5 %
3