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Question ! A bond has a yield to maturity of 9.38 percent, a 75 percent annual coupon, a S1.000 face value, and a maturity date

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Question ! A bond has a yield to maturity of 9.38 percent, a 75 percent annual coupon, a S1.000 face value, and a maturity date 21 years from today. What is the current yield? (5 marks) b. Red Mountain, Inc. bonds have a face value of $1,000. The bonds carry a 7 percent coupon, pay interest semiannually, and mature in 13.5 years. What is the current price of these bonds if the yield to maturity is 6.82 percent? (4 marks) c Healthy Foods just paid its annual dividend of S1.45 a share. The firm recently announced that all future dividends will be increased by 2.8 percent annually. What is one share of this stock worth to you if you require a 14 percent rate of return? (3 murks) d. Refer to part b. and c., explain why the investor's required rate of return on bonds and stocks are different (4 marks) (Total 16 marks)

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