13.The Gordon model

A. is a generalization of the perpetuity formula to cover the case of a growing perpetuity.

B. is valid only when g is less than k.

C. is valid only when k is less than g.

D. is a generalization of the perpetuity formula to cover the case of a growing perpetuity and is

valid only when g is less than k.

E. is a generalization of the perpetuity formula to cover the case of a growing perpetuity and is

valid only when k is less than g.

14. Sure Tool Company is expected to pay a dividend of $2 in the upcoming year. The risk-free

rate of return is 4% and the expected return on the market portfolio is 14%. Analysts expect the

price of Sure Tool Company shares to be $22 a year from now. The beta of Sure Tool Company's

stock is 1.25.

The market's required rate of return on Sure's stock is ____.

A. 14.0%

B. 17.5%

C. 16.5%

D. 15.25%

E. None of these is correct