1. ABCs beta is 1.2. If the price of its stock today is $65, and ABC will pay a dividend of $2 in one year, what is the expected stock price in one year, immediately after the dividend payment? Assume the risk-free rate is 2% and the expected return on the market is 8%.

a. $61.36

b. $68.98

c. $70.54

d. $72.98

2. Suppose stock A has higher variance than stock B. According to CAPM, which one is expected to deliver a higher return?

a. A

b. B

c. The information provided is insufficient

d. None of above is correct

3. Which of the following statements is TRUE about Enterprise Value in a Free Cash Flow Valuation

a. Enterprise Value = MV Debt + MV Equity

b. Enterprise Value - MV of Debt = MV Equity Cash on Hand

c. Enterprise Value + Cash on Hand = MV of Equity MV Debt

d. None of above is correct