Question $2$

A$.$ Clarke Enterprises' bonds currently sell for $$1,180,$ have an $11\%$ coupon interest rate and a $$1000$ par value, pay interest annually and have $18$ year to maturity. Calculate the bonds' yield to maturity $($YTM$).$

$(8$ marks$)$

B$.$ Morant Bay Ltd$.$ common stock currently pays an annual dividend of $$3\mathrm{.}60.$ The required return on the common stock is $6\%.$ Dividend is expected to grow at an annual rate of $5\%$ for each of the next $3$ years followed by a constant annual growth of $4\%$ in year $4.$ Calculate the current merket price of the common stock.

$(10$ marks$)$

C$.$ Canute Industries has $$1,000$ par value bond with a $16\%$ coupon interest rate outstanding. The bond has $12$ years remaining to its maturity date. If interest is paid semi$-$annually, what is the value of the bond when the required rate of return is $14\%.$

$(7$ marks$)$

$($Total $25$ marks$)$