A stock is expected to pay its first $51 dividend in 4 years from now. The dividend is expected to be paid annually forever and grow by -1% pa (note the negative sign). The discount rate is 2% pa. Estimate the current stock price. The current stock price should be:

Select one:

a.

$2,309.6136

b.

$1,652.948

c.

$1,601.948

d.

$1,570.5373

e.

$1,539.7424

Your friends are talking about how property prices rose after the central bank lowered interest rates, while property rents and expected rental growth rates remained the same. Your friends have different explanations for why property prices rose. Whose explanation focuses on opportunity costs? Assume that all property market participants are rational investors. The opportunity cost argument for why property prices rose is that, as:

Select one:

a.

Alice says it's now cheaper to borrow so people can borrow more and bid house prices up.

b.

Brett says rental yields had to fall until houses were as attractive as bank deposits.

c.

Carla says bank depositors became poorer so they could not pay as much for houses.

d.

Dave-aroo says rent can be more easily re-invested than interest which makes houses more attractive.

e.

Emily says: houses are more liquid than bank deposits.