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You own three investments i) An 8% Government of Canada Bond maturing in Dec. 2010 ii) A zero…

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You own three investments i) An 8% Government of Canada Bond maturing in Dec. 2010 ii) A zero coupon Government of Canada Bond maturing in Dec. 2010 iii) The coupon strip from an 8% Government of Canada Bond maturing in 2010 If there is a rise in current interest rates, the price of each of these investments will fall. a. Which investment will experience the greatest relative decline in price? b. Which investment will experience the least relative decline in price? Question 34 (5 points) ABC Inc is expected to pay the following dividends over the next four years (all paid at the end of the year): Year 1 $6.50 $5.00 WN $3.00 4 $2.00 Afterwards, the company pledges to maintain a constant 5% growth in its dividend forever. If the required return on the stock is 16%, what should be the current price of this stock?

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