2. Use the information to answer the following questions. ABC Company has been growing at a 10% rate, and it just paid a dividend of $3.00. Due to a new product, ABC expects to achieve a dramatic increase in its short-run growth rate, to 20% annually for the next 2 years. After this time, growth is expected to return to the long-run constant rate of 10%. The company's beta is 2.0, the required return on the market is 11%, and the T-bill rate is 7%. What should be the stock price today??

You expect the stock price to __________ during the first year.

Select one:

a. Decrease by 10.40%

b. Increase by 10.40%

c. Increase by 4.60%

d. Decrease by 4.60%

e. Decrease by 10.00%