1. suppose that your company has paid $3 in dividends per share last year. Financial analysts expects the dividend to grow at 8% for the next two years, and then at a constant growth rate of 5% afterwards, which will be forever. what is the value of the stock of the company now assuming your required rate of return is 12%?

a. $35.60

b. $78.66

c. $50.54

d. $47.54

2. Calculate the required rate of return of the stock, assuming that the stock's beta is 4.0 yield on three month US Treasury bill is 3%, and the expected rate of change in the S&P index is 10%.

a. 13.9%

b. 15.5%

c. 22%

d. 31%

3. Market risk could be diversified away through either random diversification or efficient diversification.

True or False?