17. Kansas Outfitters have announced a per share dividend of $2.50 for next year. Dividends are expected to increase by 4 percent annually. What is one share of this stock worth today if the appropriate discount rate is 15 percent?

18. Silicon Corp. just paid a dividend of $2.50. The company will then increase its dividend by 8 percent per year for three years after which it will maintain a constant 4 percent dividend growth rate. What is one share worth today at a required rate of return of 13 percent?

19. Creative Corp. recently paid $1.50 as its annual dividend. Future dividends are projected at $1.60, $1.70, and $1.80 over the next three years, respectively. After that, the dividend is expected to decrease by 2 percent annually. What is one share of this stock worth at a rate of return of 12 percent?

20. Logic Corp. recently paid an annual dividend of $3.80 on its common stock. This dividend increases by 5 percent per year. What is the markets required rate of return on the stock if the stock is selling for $45.80 a share?

21. Steve is buying a $1,000 face value bond at a quoted market price of 983.75. The bond carries a coupon rate of 6.0 percent, with interest paid semiannually. The next interest payment is three months from today. What is the Accrued Interest on the Bond? What is the dirty price of this bond?

22. If a bond provides a real rate of return of 2.6 percent at a time when inflation is 1.8 percent, what is the nominal rate of return on the bond using the exact relation between nominal rates, real rates and inflation?

23. The nominal rate of return on a bond for a year is 6.25 percent and inflation during the year was 3.1 percent. What is the real rate of return on the bond for the year using the exact relation between nominal rates, real rates and inflation?

24. A stock earned annual returns of 11%, -6%, 9%, and 14% for the last four years.

(a) What is the arithmetic average return for the stock over the last four years?

(b) What is the standard deviation of the returns over the last four years?

(c) What is the geometric average return for the stock over the last four years?

(d) What is the holding period return for the stock over the last four years?

(e) What would have been your holding period return if you had earned the arithmetic average return every year for the last four years?

(f) What would have been your holding period return if you had earned the geometric average return every year for the last four years?

g) Compare your answers for the holding period returns in parts (e) and (f) with the actual holding period return part (d) and comment on which average (arithmetic or geometric) is better indicator of longer-term returns.