3.1- Suppose a French company issues a bond with a par value of $1000, 15 years to maturity, and a coupon rate of 8.4 percent paid annually. If the yield

to maturity is 7.6 percent, what is the current price of the bond?

3.2- ABC will pay a year-end dividend of $2.50 per share. Investors expect the dividend to grow at a rate of 4 percent indefinitely. a- If the stock currently sells for $25 per share, what is the expected rate of

return on the stock?

b- If the expected rate of return on the stock is 16.5 percent, what is the stock price?