You buy a bond for $988 that has a coupon rate of 5.7% and a 9-year maturity. A year later, the bond price is $1,168. (Assume a face value of $1,000 and annual coupon payments.)

a.	What is the new yield to maturity on the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Yield to maturity

%

b.	What is your rate of return over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Rate of return

%

2) You believe that the Non-stick Gum Factory will pay a dividend of $3 on its common stock next year. Thereafter, you expect dividends to grow at a rate of 4% a year in perpetuity. If you require a return of 12% on your investment, how much should you be prepared to pay for the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Stock price

$