1. XYZ Company is expected to have earnings per share of $2.21 next year. If the forward price-earnings ratio for the stock should be 14, the price of XYZ should be

A. $11.79

B. $30.94

C. $14.00

D. $16.21

2. The risk-free rate is 2% and the expected return on the market portfolio is 11%. A firm has a beta of 0.6. The market risk premium is (Careful: I am NOT asking for the should-be expected return on the stock)

A. 9.0%

B. 2.0%

C. 5.4%

D. 7.4%

3. Bob purchased a stock one year ago at a price of $25 a share. In the past year, he has received four quarterly dividends of $0.75 each. Today, he sold the stock for $32. The amount of capital gains per share (dollar gain without taking dividends into account) is

A. $8

B. $5

C. $3

D. $7

Correct answers already in bold, please show work.