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1. You just created a portfolio by buying the following assets: I. 1,000 shares of Common Stock A, which just paid a dividend of $1.25

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1. You just created a portfolio by buying the following assets: I. 1,000 shares of Common Stock A, which just paid a dividend of $1.25 and is expected to generate perpetual growth of 4% forever. The common stock has a required rate of return of 8.5%. II. 300 shares of Preferred Stock B, which carry a dividend yield of 4.1% on a face value of $100. The preferred stock carry a current required return of 3.9%. III. 20 Coupon Bonds C, which carry a coupon rate of 7.4%, paid semiannually, on a face value of $1,000. The bonds have 9 years left until maturity and have a current YTM of 6.4%. a. How much will this portfolio cost you today? (15 pts) I b. Part of your motivation in collecting these assets is to generate income from holding them over the years. Going forward, how much in income (dividends and coupons) would you receive in year three (where today is year 0)? (15 pts)

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