Question: Please answer both questions 1.) Two investors are evaluating GE's stock for possible purchase. They agree on the expected value of next year's dividend and

Please answer both questions

1.) Two investors are evaluating GE's stock for possible purchase. They agree on the expected value of next year's dividend and on the expected future dividend growth rate. Further, they agree on the riskiness of the stock. However, one investor normally holds stocks for two years, while the other holds stocks for 10 years. On the basis of the type of analysis done in Chapter 9, should they both be willing to pay the same price for GE's stock? Explain with your reasoning.

2.)Bond prices change whenever the market interest rate changes. In general, short-term interest rates are more volatile than long-term interest rates. Therefore, short-term bond prices are more sensitive to interest rate changes than are long-term bond prices. Is this statement true or false. Explain your answer by making up a "reasonable" example based on a 1-year and a 20-year bond to help answer the question.

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