Stocks and Bonds:

A. Use the stock price equation (dividend equation): If the real interest rate is 2%, and a corporation offers dividend growth rate of 1%, what level of dividend would make the stock price $300?

B. You are offered a bond for $1000. It will pay a coupon of $20 per year, infinite term (its pays $20 per year forever). What would the market value of the bond be, if the real interest rate is 4%? Explain why the bond price moves inversely to the real interest rate.