0 16) Francis Peabody just won the $39,000,000 California Sae Lotery T a choice of receiving the winnings in a lump sum o.26 equal- at the beginning of each year. Assume that funds would be decide whether to take the lump sum or the annual installmen sum that would be exactly equal to the present value nearest S1. A) $38,163,612 he omery ofers the wines invested at 7 65% ,ranes "trying B)$89,000,000 c) s 13,002,576 D)$41,081,128 agall's Meats, Inc. currently pays no dividends. The firm plans to pay is fesa dividend 1 ed of the 5th year. The first dividend will be 51.00 and dividends are espectod to grow 5% thereafter. Given a required retum of 12%, what would you pay fr the stock today? A) 10.12 B)9.08 D)8.70 18) Topstone Industries is expected to pay a dividend of $2 per share per quarter nest year dividend is expected to Topstone is $40. What is the expected return on this stock? A) 22% . This at a rate of 2% forever. The current market price fr a share of grow B) 25% c) 15% D)20% 19) The average of the betas for all stocks is: A) Unknown; betas are continually changing. B) Less than 1.0; most stocks are defensive C) Exactly 1.0; these stocks represent the market. D) Greater than 1.0, most stocks are aggressive. 20) If a stock consistently goes up (down) by 1.6% when the market portfolio goes down (up) by 1.2%, then its beta equals: A) -1.33 20) D) 1.24 C) 1.33 B)-1.24 21) 21) An investor should purchase a stock when A) The expected rate of return equals or exceeds the required return. B) The market price exceeds the intrinsic value. C) The market price is greater than the justified price. D) The capital gains rate is less than the required return and no dividends are paid. 22) What can be expected to happen when stocks having the same expected risk do not have the22) same expected return? A) This is a common occurrence indicating that one stock has more PVGO B) At least one of the stocks becomes temporarily mispriced C) The expected risk levels will change until the expected returns are equal D) This cannot happen if the shares are traded in an auction market. 23) How much interest will be earned in the fourth year on an investment paying 12% compounded annually if you just deposited 100 A) 15735 23) C) 16.86 B) 5735