16. Aliant Systems, Inc. issued 10-year bonds in 2019 with a coupon rate of 2.25% and a face value of $1,000. The bonds sold for face value when issued. Since 2019, interest rates have increased, so the going rate on similar bonds is now 2.75%. Which of the following statements is most accurate? a. An investor who purchased an Aliant Systems bond in 2019 and plans to keep the bond until it matures expects to earn 2.25% plus the difference between 2.25% and 2.75%, for a total of 2.50% per year over the life of the bond. Aliant Systems must now pay bondholders interest payments of $27.50 per year due to the increase in interest rates. c. An investor who purchased an Aliant Systems bond in 2019 and plans to keep the bond until it matures expects an increase in return from 2.25% per year to 2.75% per year. d. None of the above 17. Milagrosa Nutraceuticals, Inc. intends on paying a dividend of $1.85 per share at the end of this year. The company's stock is currently selling for $33.50 per share and the growth rate of MNI stock dividends is 5%. The dividend growth rate is expected to stay at that level for the foreseeable future. What is the expected rate of return on MNI stock? 10.01% b. 10.25% c. 10.52% d. 10.80% a. 18. Oz, Inc. stock has the following forecasted returns for various states of the economy: State of the Economy Recession Below Average Average Above Average Boom Probability 19% 22% 25% 18% 16% Stock A's Return -25% -15% 20% 22% 27% The standard deviation of returns for Oz's stock is a. 18.01% b. 20.33% c. 21.09% d. 24.61% 19. You have the choice of two equal risk annuities, each paying $15,000 per year for 20 years. One is an annuity due and the other is an ordinary annuity. If you are going to be receiving the annuity payments, which annuity would you choose to maximize your wealth? a. The annuity due b. The ordinary annuity c. Since we don't know the interest rate, we can't find the value of the annuities and hence we cannot tell which one is better. d. Either one because they have the same present value