7) Consider the following average annual returns: Investment Small Stocks S&P 500 Corporate Bonds Treasure Bonds Treasury Bills Average Return 23.7% 13.8% 7.9% 6.5% 4.5% What is the excess return for the S&P 500? A) 11.5% B) 16.3% C) 9.3% D) 0% 8) The risk premium of a security is determined by its risk and does not depend on its risk. A) systematic, unsystematic B) systematic, undiversifiable C) undiversifiable, diversifiable D) diversifiable, undiversifiable 9) A stock currently sells for $25 per share and pays $0.24 per year in dividends. What is an investor's valuation of this stock if she expects it to be selling for $30 in one year and requires a 15 percent return on equity investments? A) $27.74 B) $26.30 C) $30.24 D) $26.09 10) According to the Gordon growth model, what is an investor's valuation of a stock whose current dividend is $1.00 per year if dividends are expected to grow at a constant rate of 10 percent over a long period of time and the investor's required return is 15 percent? A) $22 B) $20 C) $4.40 D) $7.33 E) $11