A common stock will pay a dividend of $2.00 next year. investors demand a 20 percent rate of return from the stock. the dividend will grow by 10 percent per year. what is a fair price for the stock today?

$10

$20

$4

$2

2. A tax-free municipal bond pays 7 percent interest. if an investor is in the 25 percent tax bracket, what is the taxable equivalent yield of the bond?

28 percent

1.75 percent

5 percent

9.33 percent