Question 1 (a) BLUE Plc just paid 5 p as a cash dividend. BLUE is expected to pay 30% of its earnings as cash dividend. The growth rate of dividend is expected to last forever. The required rate of return for BLUE's shareholders is 6%. Calculate the share price of BLUE in THREE years (P3). Full calculation workout is expected. [7 marks] (b) The information for TWO HSBC bonds is listed below. The face values of both bonds are 100. If you expect Bank of England would increase the interest rate to combat inflation very soon, which bond you would like to recommend for investing? Explain your answer. [6 marks] Issuer Coupon Rate Date to Maturity Bond Price HSBC Bank --A 6.50% 7 July 2023 114.18 HSBC Bank --B 5.38% 22 August 2033 133.35 (c) Evaluate the argument that IPO is the best option for a firm to raise equity capital". [12 marks] Question 1 (a) BLUE Plc just paid 5 p as a cash dividend. BLUE is expected to pay 30% of its earnings as cash dividend. The growth rate of dividend is expected to last forever. The required rate of return for BLUE's shareholders is 6%. Calculate the share price of BLUE in THREE years (P3). Full calculation workout is expected. [7 marks] (b) The information for TWO HSBC bonds is listed below. The face values of both bonds are 100. If you expect Bank of England would increase the interest rate to combat inflation very soon, which bond you would like to recommend for investing? Explain your answer. [6 marks] Issuer Coupon Rate Date to Maturity Bond Price HSBC Bank --A 6.50% 7 July 2023 114.18 HSBC Bank --B 5.38% 22 August 2033 133.35 (c) Evaluate the argument that IPO is the best option for a firm to raise equity capital". [12 marks]