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A) Suppose a company issues a bond with a face value of $1000,20 years to maturity and a coupon rate of 2.8 per cent paid

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A) Suppose a company issues a bond with a face value of $1000,20 years to maturity and a coupon rate of 2.8 per cent paid annually. If the yield to maturity is 4.5 per cent, what is the current price of the bond? (10 marks) B) A company will pay a dividend of $4.5 per share next year. The company pledges to increase its dividend by 3.75 per cent per year indefinitely. If you require a return of 9 per cent on your investment, how much will you pay for the company's shares today? (10 marks)

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