A stock pays annual dividends. It just paid a dividend of $6. The growth rate in the dividend is 2% pa. You estimate that the stock's required return is 10% pa. Both the discount rate and growth rate are given as effective annual rates. a Which of the following statements is NOT correct? O a. Total return of the stock is equal to the dividend yield plus the capital return. O b. Total return of the stock is equal to the company's long term cost of equity. O c. The long-term capital return of the stock is 2% O d. The dividend at time t=3 will be $6.3672 Oe. The share price at time t=0 is $75.00 You discover an investment costing $3,000 which has an expected total return of 15% pa, but a required return of only 11% pa. Of the 15% pa total expected return, the capital return is expected to be 8% pa. Assume that the required return of 11% remains constant, the dividends can only be re-invested at 11% pa and all returns are given as effective annual rates. Which of the following statements is NOT correct? O a. The investment is currently under-priced O b. The expected dividend return is 7% O c. When plotted on the Security Market Line, the investment would have a positive alpha. O d. You would use a discount rate of 11% to find the NPV of this investment Oe. The investment's price at time t=20 would be $49,099.61