1. Stock XYZ just paid its $5 annual dividend, which is expected to grow 20% annually for the next three years. After that, the dividend is expected to grow a mere 2% forever due to emerging competition. If you require a 14% return, what is the most you'd pay for this stock today?

2. The market price is $900 for a 10-year bond ($1,000 per value) that pays 8% interest (4% semiannually). What is the bonds expected rate of return?

3. Solitron preferred stock is selling for $42.16 per share and pays $1.95 in dividends. What is your expected rate of return if you purchase the security at the market price?