You have a portfolio that consists of 2000 stocks of XYZ, 1000 stocks of ABC and 100 corporate bonds. XYZ has just paid a dividend of $10 and it is estimated that it will continue to do so in perpetuity. It has a required return of 7%. ABC has just paid a dividend of $5 which you envisage will grow at 10% for 2 years and then 2% in perpetuity. It has a required return of 5%. Your corporate bonds pay 5% coupons semi-annually and currently have a yield of 10%. They will mature in 10 years.

1. What is the value of one stock of XYZ today? (5 Marks)
2. What is the value of one corporate bond today? (5 Marks)
3. What is the value of one stock of ABC today? (5 Marks)
4. What are the weightings of your portfolio? (5 Marks)