# BU340 Assignment 8

**Part A:**** Moore Company is about to issue a bond with semiannual coupon payments, a coupon rate of 8%, and par value of $1,000. The yield-to-maturity for this bond is 10%.**

**a. What is the price of the bond if the bond matures in 5, 10, 15, or 20 years?**

** b. What do you notice about the price of the bond in relationship to the maturity of the bond?**

**Part B:**** The Crescent Corporation just paid a dividend of $2 per share and is expected to continue paying the same amount each year for the next four years. If you have a required rate of return of 13%, plan to hold the stock for four years, and are confident that it will sell for $30 at the end of four years, how much should you offer to buy it at today?**

**Part C:**** Use the information in the following table to answer the questions below:**

**State of Economy**

**Probability of State**

**Return on A in State**

**Return on B in State**

**Return on C in State**

**Boom**

**.35**

**0.040**

**0.210**

**0.300**

**Normal**

**.50**

**0.040**

**0.080**

**0.200**

**Recession**

**.15**

**0.040**

**-0.010**

**-0.260**

**a. What is the expected return of each asset?**

** b. What is the variance of each asset?**

** c. What is the standard deviation of each asset?**

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Moore Company is about to issue a bond with semiannual coupon payments, a coupon …