1. If re increases to 10% , what would be the value of the constant growth stock? (Note: Do is $1.15 and the expected constant growth rateg 4%) a $29.90 b. $19.93 C. $10.87 d Undetermined -Select- 2. When rs increases from, say, 8% to 109% , the value of the constant growth stock a Increases because the interest rate is higher b. Decreases because its dividends are being discounted at a higher rate. C. Remains the same because it is a "constant growth" stock d Might either increase or decrease. -Select- 3. Move the slider so that rs is 1296. If the stock were selling on the market for $15.50, would you buy it? (Note: Do is $1.15 and the expected growth consstant rate g 496.) a Yes, it is a bargain b. No, the stock is overvalued. as the expected stock price is only $14.95. C. Not enough information to determine whether it would be a good buy Select 4. The slider for rs is limited to a minimum of 4.196 so that rs is always greater than g. Move the slider to the minimum and observe how the present value of the stock changes. Must ts be greater than g? a No reason fs needs to be greater than g because the formula adjusts the value of the stock appropriately D. Yes. because if rs were not greater than g. then the graph would be too large to display easily C Yes, because if f g. then the formula divides by zero, producing an infinite value