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Junior just received his annual bonus and is looking to invest it in one of two potential investments. Junior is considering a 15-year 8% coupon bond issued by Home Co that is currently selling for $1,032.67. His other option is to buy stock in Residential Inc. Residential just issued a $1.05 dividend and expects to grow at 5.5%. Residential current stock price is $45.82. If both investments are fairly priced and Junior intends to hold the investment indefinitely, which offers a higher return?

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Financial Management, Finance

Category:- Financial Management
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