Question: 14. You are thinking about purchasing a stock that you are convinced can be sold at the end of one year for $47.50. You expect

14. You are thinking about purchasing a stock that you are convinced can be sold at the end of one year for $47.50. You expect the stock to pay a dividend of $3.75 at the end of the year. If your required rate of return on stocks of similar risk is 9.75%, what is the most you should be willing to pay for this stock? Why?

15. You purchase a deep discount (zero coupon) bond for $643. You plan on holding the bond until it matures in 17 years. If you receive the face value of $1000 when the bond matures, what is your expected rate of return?

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