Rocket Richard an analyst with ABC Investment Management Limited is analyzing the following portfolio of securities: Security Today's Market Value 7% coupon rate, $1,000 par, 20 year bond, paying coupon annually $901.82 10 shares of 7.5%, $100 par, preferred stock 900.00 18 shares of low growth common stock 900.00 900.00 30 shares of high growth common stock Total Value $3601.82 a. What is the yield to maturity on the 20-year bond? b. Rocket expects that the required rate of returns for all securities will increase. He projects that for 20 year bond required rate of return will increase to 10%, for preferred stock to 11.5%, for low growth stock to 17%, and for high growth stock to 20%. Details for the two common stocks are as follows: Low growth Do=$4, growth rate for the next three years at 6% per year, followed by a growth rate of 4% per year thereafter. High growth Do=$1, growth rate for the next four years at 40% per year, followed by a growth rate of 5% per year thereafter. 1. What would be the new market price for the bond, the preferred stock, and the two common stocks if he is correct? What is the total market value of the portfolio? 2. By what percentage does the value of the portfolio fall? Which security suffered the most loss in value, which suffered the least? Why does this occur? Rocket Richard an analyst with ABC Investment Management Limited is analyzing the following portfolio of securities: Security Today's Market Value 7% coupon rate, $1,000 par, 20 year bond, paying coupon annually $901.82 10 shares of 7.5%, $100 par, preferred stock 900.00 18 shares of low growth common stock 900.00 900.00 30 shares of high growth common stock Total Value $3601.82 a. What is the yield to maturity on the 20-year bond? b. Rocket expects that the required rate of returns for all securities will increase. He projects that for 20 year bond required rate of return will increase to 10%, for preferred stock to 11.5%, for low growth stock to 17%, and for high growth stock to 20%. Details for the two common stocks are as follows: Low growth Do=$4, growth rate for the next three years at 6% per year, followed by a growth rate of 4% per year thereafter. High growth Do=$1, growth rate for the next four years at 40% per year, followed by a growth rate of 5% per year thereafter. 1. What would be the new market price for the bond, the preferred stock, and the two common stocks if he is correct? What is the total market value of the portfolio? 2. By what percentage does the value of the portfolio fall? Which security suffered the most loss in value, which suffered the least? Why does this occur