Homework answers / question archive /  A Pepsi bond is currently traded at the market

 A Pepsi bond is currently traded at the market

Finance

Share With

 A Pepsi bond is currently traded at the market. It has eight years until maturity and pays no coupon. It offers an interest rate of 6% p.a. (compounded yearly). If the prevailing interest rate is expected to decrease by 0.1%, how will this change the value of the zero coupon bond one year later? Assume face value of $1000. Please round your answer to two decimal places. a. Bond price will decrease by 2.1% Ob. Bond price will increase by 4.00% OC. Bond price will increase by 2.1% d. Bond price will increase by 6.70% Oe. Bond price will decrease by 4.00% QUESTION 17 The Sisyphean Company is currently trading for $25.00 per share. The company is expected to pay a $2.50 dividend at the end of the year and its equity cost of capital is 14%. If the dividend payout rate is expected to remain constant, then the expected growth rate in the Sisyphean Company's earnings is closest to: O a. 6% b.8% OC. 4% O d. 2% O e. 10%