1. **Problem statement:** (a) Given a stock with an annual dividend of Tk. 3 per share and a price of Tk. 40, find the required rate of return. (b) If the required rate of return rises to 9%, find the new price of the stock. 2. **Step (a): Calculate the required rate of return** The required rate of return $r$ can be found using the dividend discount model for a stock with no growth: $$ P = \frac{D}{r} $$ where $P$ is the price, $D$ is the dividend, and $r$ is the required rate of return. Rearranging for $r$: $$ r = \frac{D}{P} $$ Substitute the given values: $$ r = \frac{3}{40} = 0.075 $$ Convert to percentage: $$ r = 7.5\% $$ 3. **Step (b): Calculate the new price when $r = 9\%$** Using the same formula: $$ P = \frac{D}{r} = \frac{3}{0.09} = 33.33 $$ 4. **Final answers:** - Required rate of return initially: **7.5%** - New price of the stock when required return is 9%: **33.33**