19. Assume that a stock is expected to pay dividends at the end of Year 1 and Year 2 of $1.25 and $1.56, respectively. Dividends are expected to grow at a 5% rate thereafter. Assuming that ke is 11.6%, the value of the stock is closest to:

A. $22.30.

B. $23.42.

C. $24.55.

10. The risk-free rate is 6%, and the expected market return is 15%. A stock with a beta of 1.2 is selling for $25 and will pay a $1 dividend at the end of the year. If the stock is priced at $26 at year-end, it is:

A. overpriced, so short it.

B. underpriced, so buy it.

C. underpriced, so short it.