1. The common stock of Auto Deliveries sells for $26.46 a share. The stock is expected to pay $2.00 per share next month when the annual dividend is distributed. Auto Deliveries has established a pattern of increasing its dividends by 4.3 percent annually and expects to continue doing so. What is the market rate of return on this stock?

11.86 percent

9.71 percent

14.01 percent

16.16 percent

7.56 percent

2. Grand Adventure Properties offers a 6 percent coupon bond with annual payments. The yield to maturity is 4.85 percent and the maturity date is 8 years from today. What is the market price of this bond if the face value is $1,000?

$692.21

$1,074.78

$942.79

$1,088.35

$1,017.57