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b) DMM Ltd. has just issued a five-year, annual-paid corporate bond. The bond has a...

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b) DMM Ltd. has just issued a five-year, annual-paid corporate bond. The bond has a face value of 1,000 and a 3.0% annual coupon rate. If the yield to maturity on the bond is 5.7% per annum, the price of the bond is closest to: [5 marks] c) If the standard deviation of the return of stock C is 12.4% per annum and the expected stock return is equal to the cost of capital. What is the portfolio return and standard deviation if you invest in ten shares of stock C and one DMM bond as in (b), assuming the correlation coefficient between the two assets is -0.16 and the standard deviation of the bond is 3.8%? [8 marks]

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