1- Company Miami just paid annual dividend of $25 today. The dividend is expected to grow at 5% for the next 3 years, then it will grow at 3% in perpetuity. If stocks of similar company earn 10% annual return, what is the price of a share of Company Miami stock?

2- We currently have the once-in-a-generation low interest rate environment, and the rates are likely to increase in the next decade. If you recently graduated from college and have a decent job, you have decided to purchase a relative expansive house to your income. Suppose that a bank offers you three types of mortgages: adjusted rate mortgage (ARM), fixed-rate mortgage with constant payments (FRM) and graduated payment mortgage (GPM). Which type of mortgage should you choose and why?

3- Suppose that Federal Reserve actions have caused an increase in the risk-free rate, rRF. Meanwhile, investors are afraid of a recession, so the market risk premium, (rM - rRF), has increased. Under these conditions, with other things held constant, which of the following statements is most correct and why?

1. The required return on all stocks would increase, but the increase would be greatest for stocks with betas of less than 1.0.
2. The prices of all stocks would decline, but the decline would be greatest for the highest-beta stocks.
3. The prices of all stocks would increase, but the increase would be greatest for the highest-beta stocks.
4. The required return on all stocks would increase by the same amount.