a. Zoel enterprise is thinking about introducing their new product as a part of their expansion plan which they have been planning over the last 4 years but everything was not falling in Place. Now they can issue bond to do the funding of the project.

Broker has shown two bonds- Bond A and Bond B. Each has a maturity of 12 years, a par value of $1,000. In terms of yield to Maturity both bonds have shown following trend-

Year	Frequency (Probability)	Bond A (YTM)	Bond B (YTM)
2016	0.3	29%	25%
2017	0.2	18%	18%
2018	0.1	10%	20%
2019	0.2	28%	6%
2020	0.2	10%	4%

Based on the historical YTM rate of these two bonds and probability distribution, what should be the average rate of return (YTM) for each bond in the Year 2021. Find out the riskiness of each bond. Being an investor, which bond would you prefer?

b. What risks do common stockholders undertake compared to preferred stockholders? A firm's stock is currently selling for $40.00. The expected dividend one year from now is $2 and the required return is 13%. What is this firms dividend growth rate assuming the constant dividend growth model is appropriate?