Growing Real Fast Company (GRF)is Expected to Have a 25

question 3

Essay

Growing Real Fast Company (GRF)is expected to have a 25 percent growth rate for the next four years (effecting D₁,D₂,D₃,and D₄).Beginning in year five,the growth rate is expected to drop to 7 percent per year and last indefinitely.If GRF just paid a $2.00 dividend and the appropriate discount rate is 15 percent,then what is the value of a share of GRE?

Calculate the duration of zero-coupon bonds.

Understand the impact of coupon rates and maturity on bond duration.

Apply the duration-with-convexity rule for bond price calculation.

Understand the concept of duration in the context of perpetuities.

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Definitions:

Complex Response

An intricate or multifaceted reaction to stimuli, often involving multiple cognitive and emotional processes.

Shaping

A method of teaching complex behaviors by rewarding closer approximations to the desired behavior.

Operant Conditioning

A learning process in which the strength of a behavior is modified by the behavior's consequences, such as reward or punishment.

Premack Principle

A principle in psychology which states that more probable behaviors will reinforce less probable behaviors.