12-a Assume that Intel Corporation's $1,000 face value 9% coupon rate bond matures in 10 years and sells

12-a Assume that Intel Corporation's $1,000 face value 9% coupon rate bond matures in 10 years and sells for $1,100. If you purchase the bond for $1,100 and hold it to maturity, what will be your average annual rate of return on the investment?

12-b The current price per share of common stock is $15. The expected cash dividend in one year is $2 per share. The constant growth rate is 4%.

What is the rate of return on this stock at the current price? SOLUTION