Question 3 (12 marks) (a) You are considering investing in a bond that pays 4% semi-annual coupons with $1,000 face value and 15 years to maturity. If you have bought the bond today at a yield (APR) of 5%, what is your purchase price? (5 marks) (b) Stock A has just distributed a dividend of $4. It is expected that the company will increase its dividend by 18% in the coming year, 15% in the second year and 10% in the third year. Starting from the fourth year, the company will maintain the dividend growth rate at 8% forever. How much would Stock A be worth today if its yearly required rate of return is 15%? (7 marks)