Mr. Y is considering investing in three financial securities as follows. First: A 20-year bond with 6.5% annual coupon rate with interest paid on semiannual basis. The bond has 1,000 baht as par value and was issued eight years ago. Second: A preferred share with 10 baht as par value paying 8% dividend rate. Third: A common share issued by MN-Corporation with recently dividend per share of 1.50 baht. Retention ratio is 35%. MN-Corporation has 18% return on equity. ssume the market prices of the security are 950 baht, 6 baht, and 38 baht for bond, preferred share, and common share, respectively.

2.1. Compute the expected rate of return on each of these three securities.

2.2. Based on the answers in Q. 2.2, if Mr. Y requires 6%, 12%, and 14% return from investing in bond, preferred share, and common share, respectively, which security (securities) should Mr. Y purchase, explain?