a. An 12% $1,000 bond has 4 years remaining until maturity and pays coupon half yearly. Assume that the yield is 10% per annum compounding half yearly. (1) Without doing any calculations, is the bond price lower than $1,000? (3 marks) (2) Calculate the bond price (correct to the nearest cent). (7 marks) b. Estimate the price of a share that has just paid an annual dividend of $2 per share assuming that dividends are expected to grow at a rate of 5% p.a. for the next year, a further 10% for the second year and then a further 3% p.a. thereafter. Assume dividends are paid at each year-end and that the required rate of return on equity is 12% p.a. (10 marks)