Define what competitive advantage is

1. Watters Umbrella Corp. issued 20year  bonds 2 years ago at a coupon rate of 5.4 percent. The bonds   make semiannual payments. If these bonds currently sell for 85 percent of par value, what is the YTM?
2. Microhard has issued a bond with the following characteristics:

Par: $1,000

Time to maturity: 20 years

Coupon rate: 8 percent

Semiannual payments

Calculate the price of this bond if the YTM is

1. Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon rate of 5.5 percent paid  semiannually and 18 years to maturity. The yield to maturity of the bond is 6.2 percent. What is the dollar price of the bond?
2. The next dividend payment by ECY, Inc., will be $1.56 per share. The dividends are anticipated to maintain  a growth rate of 4 percent, forever. The stock currently sells for $29 per share.  What is the required return?
3. Schiller Corporation will pay a $3.14 per share dividend next year. The company pledges to increase its   dividend by 5 percent per year, indefinitely. If you require a return of 12 percent on your investment, how much will you pay for the company’s stock today?
4. The Starr Co. just paid a dividend of $1.90 per share on its stock. The dividends are expected to grow at a  constant rate of 6 percent per year, indefinitely. Investors require a return of 10 percent on the stock.

What is the current price?

What will the price be in three years?

What will the price be in 5 years?

7.         Zoom stock has a beta of 1.46. The risk-free rate of return is 3.07 percent and the market rate of return  is 11.81 percent. What is the amount of the risk premium on Zoom stock?

1. The risk premium for an individual security is computed by:

9.         The risk-free rate of return is 3.68 percent and the market risk premium is 7.84 percent. What is the  expected rate of return on a stock with a beta of 1.32?

1. Mullineaux Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its  cost of equity is 18 percent, and the cost of debt is 6 percent. The relevant tax rate is 30 percent.   What is the company’s WACC?