As an investment manager, you are considering a choice between adding either a new stock or a new bond to your investor portfolio:

• The stock currently sells at 70; it has just paid a dividend of 8, and the dividend is expected to stay fixed indefinitely.
• The bond is a pure-discount (zero-coupon) bond, with three years to maturity; it currently sells for 140, and its face value is 200.

Required: If your required rate of return is 11%, show you buy the stock or the bond? Show your workings clearly