4) Assume that risk free rate of return is 4%, Beta is 1.5 and the expected return on the market is 12%. What is the required rate of return based on the CAPM?

16.0%

4.0%

17.3%

15.5%

1) KTS corporation currently pays a dividend of $1 per share. KTS is expected to grow at 10% for the next 2 years then KTS will grow at a constant rate of 5% per year. If the required rate of return for KTS stock is 10% then what is the value per share today?

$27.52

$26.62

$23.00

$25.41

2) Ogden currently pays a dividend of $1 per share. Ogden is expected to grow at a constant rate of 8% per year and has a required rate of return on equity of 12%. What is the value of Ogden stock?

$27.00

$54.00

$32.50

$13.75

3) CIS corporation currently pays a dividend of $2 per share. Assume that CIS is expected to grow (shrink) at a constant rate of negative 5% and has a required rate of return on equity of 10%. What is the value of CIS stock?

$8.50

$16.75

$12.67

$24.67