11. You observe a company's common stock selling for $40.00 per share. The next year's dividend is expected to be $4.00, and is expected to grow at a 1% annual rate forever. If your required rate of return is 12%, should you purchase the stock?

	A	Yes, because the present value of the expected dividends is greater than $40.
	B	No, because the present value of the expected dividends is greater than $40.
	C	Yes, because the present value of the expected dividends is less than $40.
	D	No, because the present value of the expected dividends is less than $40.

12.Stock A has the following returns for various states of the economy: State of the Economy Probability Stock A's Return Recession 5% 15% Below Average 25% -2% Average 40% 9% Above Average 25% 14% Boom 5% 30% Stock A's expected return is:

	A	8.85%
	B	7.35%
	C	8.35%
	D	6.60%

13.Shasta Co. just paid a dividend of $1.65 on its common stock. This company's dividends are expected to grow at a constant rate of 3% indefinitely. If the required rate of return on this stock is 11%, compute the current value per share of Shasta stock.

	A	$20.63
	B	$21.24
	C	$55.00
	D	$15.00

14.ABC Airways common stock just paid a dividend of $2.50. Dividends are expected to grow at a rate of 8% indefinitely. If investors require a rate of return on the stock of 15%, what should be the value of ABC Airway's common stock today?

	A	$42.44
	B	$41.46
	C	$35.71
	D	$38.57

15.The U.S. Treasury Bills are yielding 1.5%. What would be the expected return of a stock with beta of 1.91, if S&P 500 is expected to provide a return of 8.75%?

	A	13.3%.
	B	15.4%.
	C	12.9%.
	D	8.2%.