1.If D₀ = RM4.00, rs = 9%, and g = 5% for a constant growth stock, what are the stock's expected dividend yield and capital gains yield for the coming year?

2. (a) Explain what is meant by the terms "horizon (terminal) date" and "horizon (terminal) value".

(b)Suppose D₀ = RM5.00 and rs = 10%. The expected growth rate from Year 0 to Year 1 (g0 to 1) = 20%, the expected growth rate from Year 1 to Year 2 (g1 to 2) = 10%, and the constant rate beyond Year 2 is g_n = 5%. What are the expected dividends for Year 1 and Year 2? What is the expected horizon value price at Year 2? What is the expected P₀?

3.(a) A bond that pays interest forever and has no maturity date is a perpetual bond, also called a perpetuity or a consol. In what respect is a perpetual bond similar to

(i) a non-growth common stock and (ii) a share of preferred stock?

(b) A preferred stock has an annual dividend of RM5. The required return is 8%. What is the Vps?