1 a). KLM has a semiannual bond with a coupon rate of 11 percent. The bonds mature in 20 years and have a par value of $1000. If these bonds currently sell for $1035, what is the yield to maturity?

b). Loveday and Co. common stock is currently selling 99. Industry analysts are forecasting a dividend of 3.70 for next year and a growth rate of 5 percent per year for the foreseeable future. What is the expected annual rate of return (in percentage) for the stock?