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Brian has one share of stock and one bond. The total value of the two...

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Finance

Brian has one share of stock and one bond. The total value of the two securities is $1,318.00. The bond has a YTM of 12.64 percent, a coupon rate of 8.37 percent, and a face value of $1,000.00; pays semi-annual coupons with the next one expected in 6 months, and matures in 5 years. The stock pays annual dividends that are expected to grow by 4.99 percent per year forever. The next dividend is expected to be $12.16 and paid in one year. What is the expected return for the stock?

5.25% (plus or minus 0.03 percentage points)

2.57% (plus or minus 0.03 percentage points)

8.81% (plus or minus 0.03 percentage points)

7.56% (plus or minus 0.03 percentage points)

None of the above is within 0.03 percentage points of the correct answer

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