1. The common stock of Tasty Treats is valued at $10.80 a share. The company increases its dividend by 8 percent annually and expects its next dividend to be $0.20 per share. What is the total rate of return on this stock?

a. 8.64 percent

b. 9.12 percent

c. 9.40 percent

d. 9.85 percent

e. 10.64 percent

2. River Rock, Inc. just paid an annual dividend of $2.80. The company has increased its dividend by 2.5 percent a year for the past ten years and expects to continue doing so. What will a share of this stock be worth six years from now if the required return is 16 percent?

a. $23.60

b. $24.65

c. $25.08

d. $25.50

e. $26.90

3. A stock has a market price of $46.10 and pays a $2.40 annual dividend. What is the dividend yield?

a. 4.13 percent

b. 4.84 percent

c. 5.21 percent

d. 5.52 percent

e. 5.78 percent

4. The required return on Mountain Meadow stock is 14 percent and the dividend growth rate is 3.5 percent. The stock is currently selling for $11.80 a share. What is the dividend yield?

a. 7.50 percent

b. 8.00 percent

c. 9.75 percent

d. 10.50 percent

e. 12.50 percent

5. The Toy Box pays an annual dividend of $2.40 per share and sells for $46.60 a share based on a market rate of return of 15 percent. What is the capital gains yield?

a. 7.35 percent

b. 7.78 percent

c. 9.23 percent

d. 9.85 percent

e. 10.11 percent

6. Western Beef stock is valued at $62.10 a share. The company pays a constant annual dividend of $4.40 per share. What is the total return on this stock?

a. 6.62 percent

b. 6.81 percent

c. 7.09 percent

d. 7.49 percent

e. 7.82 percent

7. A preferred stock sells for $48.20 a share and has a market return of 15.65 percent. What is the dividend amount?

a. $6.93

b. $6.80

c. $7.25

d. $7.42

e. $7.54