QUESTION $3$

Cathy has one share of stock and one bond. The total value of the two securities is $$1,164\mathrm{.}07.$ The bond has a YTM of $13\mathrm{.}40$ percent, a coupon rate of $10\mathrm{.}30$ percent, and a face value of $$1,000$; pays semi$-$annual coupons with the next one expected in $6$ months; and matures in $7$ years. The stock pays annual dividends that are expected to grow by $1\mathrm{.}11$ percent per year forever. The next dividend is expected to be paid in one year. The stock has an expected return of $12\mathrm{.}40$ percent per year. What is the dividend in $1$ year expected to be for the stock?

$$34\mathrm{.}11($plus or minus $3$ cents$)$

$$40\mathrm{.}81($plus or minus $3$ cents$)$

$$37\mathrm{.}46($plus or minus $3$ cents$)$

$$59\mathrm{.}21($plus or minus $3$ cents$)$

the answer cannot be obtained based on the given information