1) The required return on a stock is equal to which one of the following if the dividend on the stock increases by a constant percent per year?

a) Dividend yield Capital gains yield

b) Dividend yield + Capital gains yield

c) (P0/D1) g

d) Dividend yield Capital gains yield

2) Brand Enterprises is expected to pay $3.75 dividends next year and expected to grow at 2.62% indefinitely. If the current price of the stock is $85.47, what is the required rate of return?

a) 6.37%

b) 7.00%

c) 7.12%

d) 4.38%

3) Sunbelt Enterprises has a beta of 1.5. What is firm's required rate of return if the the risk-free is 3.5% and market risk premium is 8%?

a) 17.25%

b) 15.5%

c) 12%

d) 8.5%

e) 11.5%