1. According to the price/earnings approach to stock valuation, if the dividend growth rate is expected to drop or if the required return goes up, the net effect is a

a. lower P/E ratio

b/ higher stock price

c. higher P/E ratio

d. higher retention rate

2. Assume the initial margin on a Swiss franc futures contract is $1,000. If an individual purchases a contract at $.49 per franc and the contract involves 50,000 Swiss francs, what return on invested capital will the investor receive if the price per franc moves to $.51

a. 100 percent

b. 200 percent

c. 12 percent

d. 50 percent