1. You find a stock with a beta of 1.3 that is expected to pay a dividend of $2.40 next year that is expected to grow at 6.3% afterward. If the risk-free rate is 3% and the expected market return is 8%, what should be the price of the stock?

A. $35.93

B. $33.80

C. $75

D. $79.73

2.Your firm just paid a dividend of $2.20 that is expected to grow at 5% and your beta is 0.8. You are considering an acquisition that would increase your growth rate to 7.5% and your beta to 1.2. If the risk-free rate is 2% and the expected market return is 8%, should you approve the acquisition?

A. Yes

B. No

C. Not enough information to answer

3.What should be the price of a stock with a beta of 0.7 that just paid a dividend of $1.25 that is expected to grow at 4% if the risk-free rate is 3% and the expected market return is 10%?

A. $69.44

B. $33.33

C. $32.05

D. $72.22

4.A stock with a beta of 1.4 will pay a dividend of $2 next year that is expected to grow at 7%. If the risk-free rate is 2% and the market risk premium is 5.5%, what is the most you would be willing to pay for the stock today?

A. $20.76

B. $79.26

C. $22.22

D. $74.07

5.

1.0 Points

A stock with a beta of 0.7 is priced at $118.50 and just paid a dividend of $2.85. If the risk-free rate is 2% and the market risk premium is 7%, what growth rate does the market expect for the stock?

A. 3.10%
B. 3.02%
C. 4.50%
D. 4.39%