1.Which ONE of the following statements is true about secondary markets?

Select one:

A. In secondary markets, outstanding shares are bought and sold among investors.

B. For an investor, the function of secondary markets is to provide profitability for the shares of securities they own.

C. An active secondary market causes companies to sell their new debt or equity issues at a higher cost of funds.

D. All of the above are true statements

2.After paying a dividend of $1.90 last year, a company does not expect to pay a dividend for the next year. After that it plans to pay a dividend of 4.55 in year 2 and then increase the dividend at a rate of 4 percent per annum in years 3 to 6. What is the expected dividend to be paid in year 5? (to nearest cent; don't include $ sign)

3.A company has just paid its first dividend of $2.60. Next year's dividend is forecast to grow by 8 percent, followed by another 8 per cent growth in year two. From year three onwards dividends are expected to grow by 3.2 percent per annum, indefinitely. Investors require a rate of return of 15 percent p.a. for investments of this type. The current price of the share is (round to nearest cent)

Select one:

a. $24.79

b. $22.50

c. $12.07

d. $12.38