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3) You buy a constant growth stock today for $100. It pays a dividend in year 1 of $5 and grows at 10 percent per

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3) You buy a constant growth stock today for $100. It pays a dividend in year 1 of $5 and grows at 10 percent per year. Draw a cashflow diagram for the stock if you sell it at the end of year 2. What is your average return on the stock over the two years? 4) You invest in an MBS 9, 30 year with a face value of $100,000. Draw a cash flow diagram for the MBS if it survives 8 years. 5) You would like to retire at the end of 40 years with an annual pension of $1 million per year for the following 30 years. How much would you have to invest each year for the next 40 years in order to meet those withdrawals. Assume you can invest your money at 10% per year for the entire 70 year period

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