Macroeconomics
A bond will pay \$100 in one year, \$100 in two years, and \$1,100 in three years. If the interest rate is 5%, what is the present value of these cash flows?
A stock is expected to pay a \$2 dividend next year, with dividends growing at 4% annually. If the required rate of return is 8%, what is the price of the stock?
Which statement best compares the valuation methods for bonds and stocks?
