Refer to the previous question. What will be the value of these securities in one year if the required return is 6 per cent?
A) £1151.92
B) £972.52
C) £1100.15
D) £900.18
E) £936.72

Question

Quizplus · Accepted Answer

To calculate the value of the security in one year with a required return of 6%, we need to use the formula: FV = PV x (1 + r)n, where PV is the present value of the security, r is the required rate of return, and n is the number of years. So: 
FV of bond = £1,000 x (1 + 0.06)^1 = £1,060
FV of stock = £1,200 x (1 + 0.06)^1 = £1,272
Total value = £1,060 + £1,272 = £2,332
Therefore, the closest option to this answer is C (£1100.15).

Refer to the Previous Question