1.You buy a stock from which you expect to receive an annual dividend of $2.50 for each of the five years that you plan on holding it. At the end of year five, you expect to be able to sell the stock for $50. What is the most that you should be willing to pay today for a share of this company if you want to earn a return of at least 10%?

A) $40.52B) $56.25C) $62.50D) $68.75

2.You expect that six years from today, Periwinkle Corporation will begin paying its first-ever dividend of $1.00 a share, an amount that will be held constant. If you require a rate of return of 12%, what is the most that you should be willing to pay TODAY for a share of Periwinkle's preferred stock?

A)$4.00B) $4.73C) $6.87D) $8.33

3.Beta Corporation just paid a dividend of $4.00 per share on its common stock. Dividends are expected to grow at an annual rate of 10% for the next two years and then at 2% thereafter. If you want to earn a minimum return of 8%, what is the most that you would be willing to pay for a share of Beta Corporation today? (Note: Use all digits in your calculation then round your final answer to the nearest cent.)

A)$70.48B) $73.24C) $78.77D) $85.07

4.Middle Gulf Industries' stock is only about 80 percent as risky as the market on average. Given a market risk premium of 7.5%, and a risk-free rate of 2.5%, according to CAPM, what is the expected return for Middle Gulf Industries?

A)5.0%B)6.5%C) 8.5%D)10.0%

5.Consider the following SAMPLE of returns: 6%, -5%, 3% and 10%. What is the standard deviation of this population of returns?

A)0.30%B) 0.40%C) 5.50%D) 6.35%