1. What is the estimated required rate of return on Woidtke's stock? Do not round intermediate calculations. Round the answer to three decimal places. (Assume the market is in equilibrium with the required return equal to the expected return.) %
2. If a bond is trading at 97% of par. In this case par is $1,000 and currently yielding 10% and matures in 3 years. What is the nominal coupon interest rate? Also, would you recommend this bond to an investor who’s requested rate of return is 8% and explain thoroughly.