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Victor has one share of stock and one bond. The total value of the two securities is $ 1 , 3 7 3 . 4

Victor has one share of stock and one bond. The total value of the two securities is $1,373.40. The bond has a YTM of 12.84 percent, a coupon rate of 8.87 percent, and a face value of $1,000.00; pays semi-annual coupons with the next one expected in 6 months, and matures in 6 years. The stock pays annual dividends that are expected to grow by 4.77 percent per year forever. The next dividend is expected to be $12.35 and paid in one year. What is the expected return for the stock? 7.07%(plus or minus 0.03 percentage points)5.00%(plus or minus 0.03 percentage points)2.30%(plus or minus 0.03 percentage points)8.08%(plus or minus 0.03 percentage points) None of the above is within 0.03 percentage points of the correct answer

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