1.Other things being equal, how could the price of a constant growth stock be affected if there is a decrease in its rate of return, rS?

A)No change.

B)Higher.

C) Lower.

2.Other things being equal, the stock price of a preferred stock is expected to ______.

A) decrease annually.

B)either increase or decrease annually.

C)increase annually.

D)stay constant.

3.Other things being equal, how would the price of a discount bond change one year from now if the market interest rate increases at that time?

A)Decline.

B)No change.

C)Not enough information to determine.

D)Increase.