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Answer soon plz Suppose two instruments are available: - 30-year maturity bond with a par value of 2000. The coupon rate is 10%, and the

Answer soon plz

Suppose two instruments are available:

- 30-year maturity bond with a par value of 2000. The coupon rate is 10%, and the market interest rate is 8% per annum. Coupon payments are made semiannually.

- A firms share with a current (year 0) dividend of 10. The return on equity of the firm is 15%, and the plowback ratio is 40%. The required rate of return is 12%.

Assume that the current market price of the share provided above is 400. Is the stock overvalued or undervalued? Is this valuation consistent with the efficient market hypothesis?

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