1. A tech start-up company grows very rapidly, causing it to initially reinvest all earnings in new growth. Assume that four years from today, this company pays a dividend of $3.00 per share, which is expected to grow at 5% per year for ever. If investors require a 17% return to hold the common stock, what price per share would you expect to pay?

Multiple Choice

$15.61

$12.41

$24.25

$22.35

2. What is the market predicting for the yield on four-year Government of Canada bonds, two years from today, given that the yield on two-year Government of Canada bonds is currently 3.25% and the yield on six-year Government of Canada bonds is currently 4.90%?

Multiple Choice

• 4.25%

• 2.85%

• 5.73%

• 3.28%