1. What are the two potential sources of return that shareholders may expect to receive from investing in the firm's stock? a. taxes and dividends b. capital gains and taxes c. dividends and capital gains d. return and taxes 2. which two documents involved in securities issuance contain very similar information? a. articles of incorporation b. registration statement c. preliminary prospectus d. (a) and (c) e. (b) and (c) 3. To whom is the liquidity benefit of secondary markets valuable? a. investors b. firms c. both a and b above d. none of the above 4. Assume an investor requires an additional 3.5% for each unit of risk he faces. He is considering buying a security with 2 units of risk associated with it. The risk-free rate is 3%. What is the required return on this security for him? a. 12% b. 10% c. 7% d. none of the above 5.How do you calculate the risk premium on a company's 10-year-to-maturity bond, if you know that bond's yield? a. the bond's yield minus 10-year Treasury yield b. the bond's yield minus 30-day Treasury yield c. the bond's yield divided by 10-year Treasury yield d. none of the above 6. How much should you be willing to pay to purchase a preferred stock that pays $3 dividend? Assume you require 18% return on this investment. a. $2.54 b. $8.67 c. $13.96 d. $16.67