1. If a firms required return increases (and all else remains constant), what would you expect to happen to the current value of the firms stock?

A. The value would increase.

B. The value would decrease.

C. The value would stay the same.

D. You cannot determine what will happen to the value of the firms stock.

2. If a firms expected growth rate increases (and all else remains constant), what would you expect to happen to the current value of the firms stock?

A. The value would increase.

B. The value would decrease.

C. The value would stay the same.

D. You cannot determine what will happen to the value of the firms stock.

3. If a firms expected dividend increases (and all else remains constant), what would you expect to happen to the current value of the firms stock?

A. The value would increase.

B. The value would decrease.

C. The value would stay the same.

D. You cannot determine what will happen to the value of the firms stock.

4. Corporation recently paid a dividend of $1.60 last year and plans to grow at a constant 5 percent rate for the indefinite future. If the firms required return is 20 percent, what is the current price of the firms stock in the market?

A. $11.20

B. $10.67

C. $9.52

D. $9.07

E. $16.80