if you are not given the par value of the bond, then assume it to be 1000. Question 2 PepsiCo. Inc.

if you are not given the par value of the bond, then assume it to be 1000. Question 2 PepsiCo. Inc. shares trade on NasdaqGS under the ticker symbol PEP. In 2019, analysts forecasted a five-year growth rate of 8% when the current dividend was(Dy=$ 2.3).Suppose PepsiCo.Inc. grows at 8% for five years and then at 5% thereafter. Assuming an 7% discount rate, what is the present value of the PEP's share? The current price is 134.06 (November 18.2019), would you buy this stock? Explain your answer Question3 You decide you will invest in the following bonds. It is November 19, 2019 and you're considering bonds issued by Company 1 and Company 2 with the following properties. Bond (1) Bond (2) Years to maturity Coupon rate 8% Yield to maturity 7% Market Price 950 1050 a) For each bond explain why it is selling at a premium or a discount b) As per the most recent forecasts, interest rates are expected to fall in the future. What will happen to the price of each bond? Which of these bonds has the largest price change? Explain 7% Question 4 You have received the following information for Bond X, the annual coupon rate is 11%, the bond was issued in 2015 and will mature in ten years. The current market price is $933. What is the yield to maturity and the current yield of the bond? Which yield will you use to evaluate the bond and why? GOOD LUCK

 

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