Stocks Valuation and Bond Valuation
Stocks Valuation and Bond Valuation
Use references to support your responses as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.
Questions
In a Word document, respond to the following.

Describe the rights and advantages belonging to shareholders

Explain the differences between the Standard and Poor’s 500 Index and the Dow Jones Industrial Average. Which is a better measure of stock market performance? Why?

Describe the differences between common stock and preferred stock.

Explain what a call provision enables bond issuers to do. Why would bond issuers exercise a call provision?

Define a discount bond and a premium bond. Provide examples of each.

Describe the relationship between interest rates and bond prices.

Describe the differences between a coupon bond and a zero coupon bond.
Problems
In either a Word document or Excel spreadsheet, complete the following problems.

You may solve the problems algebraically, or you may use a financial calculator or an Excel spreadsheet.

If you choose to solve the problems algebraically, be sure to show your computations.

If you use a financial calculator, show your input values.

If you use an Excel spreadsheet, show your input values and formulas.
In addition to your solution to each computational problem, you must show the supporting work leading to your solution to receive credit for your answer.
Compute the following:

Imagine that on June 4, the Dow Jones Industrial Average closed at 13,598.14, which was up 148.86 points from the previous day’s close of 13,449.28. Calculate the return, in percent to four decimal places, of the stock market for June 4.

The cost per stock at a brokerage firm is $0.10. Calculate how much money you would need to buy 150 shares of HiTech, Inc., which trades at $18.22.

HiTech, Inc.’s growth for the future is forecasted to be a constant 10 percent. HiTech’s next dividend is expected to be $1.18. Calculate the value of HiTech stock when the required return is 12 percent.

Preferred stock from HiTech, Inc. pays $1.20 in annual dividend. Calculate the value of the stock if the required return on the preferred stock is 4.5 percent.

HiTech, Inc. has earnings per share of $1.82 and a P/E ratio of 31.54. Calculate the stock price.

Assuming semiannual compounding, what is the price of a zero coupon bond that matures in 3 years if the market interest rate is 5.5 percent? Assume par value is $1000.

Using semiannual compounding, what is the price of a 5 percent coupon bond with 10 years left to maturity and a market interest rate of 7.2 percent? Assume that interest payments are paid semiannually and that par value is $1000.

Using semiannual compounding, what is the yield to maturity on a 4.65 percent coupon bond with 18 years left to maturity that is offered for sale at $1,025.95? Assume par value is $1000.