For this question your job is to price the following two securities. Suppose the current date is January 1^st, 2022, and that you have the following:

Common Stock A:

Dividends are paid annually (on Dec. 31^st).

You expect the next 3 dividend payments to be: $0.75, $1.50, and $2.25 per share respectively.

Thereafter, dividends are expected to grow at a rate of 2% per year (forever).

Required return on equity (discount rate for equity) is 12%.

Corporate Bond B:

Expires in 10 years (i.e., matures in 10 years).

Pays annual coupons equal to 7% of the bonds face value.

Face value = $1000.

YTM (discount rate) is 6%.

Part A: Please compute the current price of Stock A.

Part B: What is the price of Stock A in one year (on January 1^st, 2023)?

Part C: Please compute the price of Corporate Bond B.

Part D: Suppose you buy the bond today (with 10 years to maturity) and hold it for 2 years. What is your rate of return if the YTM when you sell is: i) 5% and ii) 7%?