1. Over the period of 1926 to 2011, small company stocks had an average return of ____%

8.8

16.5

12.4

14.6

10.2

2.

The yield to maturity on a bond is currently 8.25 percent. The real rate of return is 3.90 percent. What is the rate of inflation?

4.43 percent

4.19 percent

4.35 percent

4.30 percent

4.50 percent

3.

Miller Brothers Hardware paid an annual dividend of $1.55 per share last month. Today, the company announced that future dividends will be increasing by 3.00 percent annually. If you require a 9.4 percent rate of return, how much are you willing to pay to purchase one share of this stock today?

$53.22

$24.95

$51.67

$23.40

$26.50

4.

The average risk premium on U.S. Treasury bills over the period of 1926 to 2011 was _____%.

0.0

1.6

2.2

3.1

3.8

5.

Assuming semiannual compounding, what is the price of a zero coupon bond with 21 years to maturity paying $1,000 at maturity if the YTM is (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):

		Price of the Bond
a.	6 percent	$
b.	9 percent	$
c.	12 percent	$
6. Roy's Welding Supplies common stock sells for $21 a share and pays an annual dividend that increases by 6 percent annually. The market rate of return on this stock is 9 percent. What is the amount of the last dividend paid? $0.59 $0.65 $0.63 $0.58 $0.81