1. AMP Chemicals Inc. decides to issue 10-year bonds with a par value of $1,000 and annual coupon payments at the coupon interest rate of 15%. However, the return on other bonds of similar risk is 12% p.a. at the market. What would be a fair price for these bonds?
2. Kaizen manufacturing company’s required rate of return is 15% p.a. and the expected growth rate in dividends is 8.5% p.a. Calculate the dividend yield.