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Question 1 a. Ixora Berhad just paid a dividend of RM1.95 per share on its common stock. The dividends are expected to grow at
Question 1 a. Ixora Berhad just paid a dividend of RM1.95 per share on its common stock. The dividends are expected to grow at a constant rate of 6% per year indefinitely. If investors require an 11% return on Ixora Berhad's common stock. From the information given, find out the common stock price: b. i. today. (2 Marks) ii. in three years. (2 Marks) You are given the information concerning two issues of bonds, Bond A has a coupon rate of 3% while Bond B has a coupon rate of 6%. The coupon is paid once a year. Both bonds have time to maturity of 5 years and par value of RM1,000. From the information given, you are required to answer the following questions. i. Compute the value of both bonds if the market rate is 10%. (2 Marks) ii. If the market rate has increased to 12%, determine the value of both bonds. iii. Interpret your findings in part (b)(i) and (ii). (2 Marks) (2 Marks) (Total: 10 Marks)
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