(a) Moxley Corporation's bond has a maturity of 12 years and pay annual coupons. It pays a coupon rate of 6% for the first 4 years, a coupon rate of 7% for the next 4 years and a coupon rate of 8% for the last 4 years. Shirley bought this company's bond with a par value of $1,000 at the price of $800. If interest rates remain the same, calculate the Shirley's expected capital gain yield for the current year (Hint: a bond's yield to maturity is equivalent or similar to its internal rate of return). (10 marks) (b) Lexus Toys just paid a dividend of $5.00 (D.). Lexus's growth rate is expected to be a 4% per annum for 2 years, after which dividends are expected to grow at a constant rate of 7% forever. Lexus's required return on stock is 10%. The current stock price of Lexus's common stock is $170. Determine whether this stock is under-or over-valued