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QUESTION 12 Rico has one share of stock and one bond issued by the Island Adventure Company. The total value of the two securities is
QUESTION 12 Rico has one share of stock and one bond issued by the Island Adventure Company. The total value of the two securities is 51,080. The bond has a YTM of 9.8 percent, a coupon rate of 8.8 percent and a face value of $1,000: pays semi-annual coupons with the next one expected in 6 months and matures in 6 years. The stock pays annual dividends and the next dividend is expected to be $12.30 and paid in one year. The expected return on the stock is 19.0 percent. What is the price of the stock expected to be in 1 year? a. 5135 94 (plus or minus 50.10) b. 5148.24 (plus or minus $0.10) 5115.01 plus or minus 50.10) d. 582.90 (plus or minus 50.10) e. None of the above is within 50.10 of the correct
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