2. You have a stock that currently pays a dividend of 120p annually and is expected to grow at 3% p.a. You found that the risk of the company requires a rate of return of 5% p.a. a. What is the value of this stock? [2 marks] b. You observe that this stock trades at 120 and has an actual rate of return of 8% and suspect that it is in a bubble. What is the likelihood of this bubble bursting? [8 marks]