1 pts Question 21 Suppose ABC's last dividend was $1.40 per share. Sales and profits for ABC are expected to grow at a rate of 5% per year. Its dividend is expected to grow by the same amount indefinitely. If the required return is 10%, what is the value of ABC stock? $14.00 $28.00 $25.80 $15.25 $29.40 Question 22 1 pts Suppose the Pale Hose Corp. is expected to pay a dividend next year of $1.75 per share. Dividends are expected to grow at a rate of 15% for the following 2 years and then at 3% per year thereafter indefinitely. If the required return is 14%, what is the value (or expected price) of a share of Pale Hose? $17.92 $15.49 $18.49 $16.98 $19.25 1 pts Question 23 Which of the following describes a stock whose expected return (based on its current price) plots above the SML? The security provides a return that exceeds the average return on the market The security is providing a return that is less than its required return The security is undervalued The security is overvalued The security's beta is less than the market beta Question 24 1 pts Suppose the expected return on the market is 15% and the risk-free rate is 4%. You are investigating potential stock investments. Suppose LiteForm stock has a beta of 1.8. According to the CAPM, what is its required return? 19.67% 25.2% 23.8% 17.3% 18.6% Question 25 1 pts In the previous problem, suppose you also determine that, right now. LiteForm stock is priced to give a return of 16 percent. In other words, given its current price and beta, it has an expected return of 16 percent. According to the CAPM (SML), is this stock correctly priced, overvalued, or undervalued? (Note: graph is not to scale, but may be helpful) Return, SML b 1.0 correctly priced undervalued overvalued