2.)Metsan A..'s outstanding bonds have a 15-year maturity and 1.000TL par value. Their nominal yield tomaturity is 18,5%, they pay interest semiannually, andthey sell at a price of 1,075.38TL.

a. What is the bond's nominal (annual) coupon interestrate?

b. What are the expected current and capital gainsyields on the bond for the next year?

c. Will the realized rates of return be the same as theones you found in part b if market interest ratesincrease? Explain.

3.) Conservative Corp. has a dividend policy wherebythe company distributes 75% of its earnings every yearto its shareholders and retains the rest. The companyrecently hired a new CEO who thinks that the firmshould make more investments in order to grow the size of its assets, so he is proposing to cut the dividendpayout ratio to 40%. If the company estimates that thenew investment projects that it can take on will earn 30% per year on average and the companys cost of capital is 25%, what kind of effect will this proposal have on theCompanys stock price? Should this proposal be accepted?