Question 4. Stocks and Bonds (CLO 3, 4) [ 8 marks] 1. Dubai Islamic Bank is growing very fast in the last 10 years. Dividends are expected to grow at a rate of 11% in the next year, at 14% in the second year, and at a constant rate of 8% thereafter Dubai Islamic Bank last dividend was $1.2, and the required rate of return on the stock is 11%. Calculate the value of the stock today. 2. A bond that matures in 16 years has a par value of $1,000, an annual coupon of 10%, and a market interest rate of 7%. What is its price today? Hint: You can Use the following formulas: 1. Po-Dj/rs-g, where Di-Do(1+g) FV. PV = 2. (1 + r)" 3. For Ordinary annuity: PV. - GFX[1- Ans