QUESTION 1: (26 marks) a) Discuss these three terms call provision, convertible bond provision, subordinated debt and how each of the provision will make the bonds desirable or otherwise as an investment. (6 marks) b) You are interested in J bond with a $1,000 face value and a 10 percent annual coupon rate matures in 15 years. You can use PVIF, FVIF, PVIFA and FVIFA table. i. Determine the value of the bond with a required rate of return of 13%. (4 marks) ii. Compare with a zero-coupon bond with similar risk that is selling for $150. The bond has a face value of $1,000 and matures in 15 years. (4 marks) iii. Which bond you should invest in, the zero-coupon bond or the bond in part b)i and why? Assume the market price of the bond in part a is $820. (4 marks) c) You are considering the purchase of Unilever Company stock that is expected to pay dividends of $2.50 per share next year and $3.00 per share the following year. You believe that you can sell the stock for $18.00 per share two years from now. If your required rate of return is 12%, what is the maximum price that you would pay for a share of Unilever Company stock? (4 marks) d) Is the following common stock priced correctly? If no, what is the correct price? Price = $26.25 Required rate of return = 13% Dividend year 0 = $3.40 Dividend year 1 = $3.50 (4 marks)