A)

Which assertion about stocks A, B, Q, and Z is true if PA > PB > 0 and PZ > PQ > 0? All 4 stocks pay annual dividends with the next dividend expected to be equal to D and paid in 1 year. The dividends for each stock are expected to grow at a constant rate forever. The expected annual growth rates for stocks A and B are expected to be different, and the expected annual growth rates for stocks Q and Z are expected to be the same. The expected returns for stocks Q and Z are expected to be different and the expected returns for stocks A and B are expected to be the same. Assume all expected dividends, growth rates, and returns are positive and all expected growth rates are less than all expected returns.

Stock	Price	Next expected dividend	Expected dividend growth rate	Expected return
A	PA	D	GA	R
B	PB	D	GB	R
Q	PQ	D	G	RQ
Z	PZ	] D	G	RZ

The expected growth rate of stock A is greater than the expected growth rate of stock B and the expected return of stock Q is greater than the expected return of stock Z

The expected growth rate of stock A is greater than the expected growth rate of stock B and the expected return of stock Z is greater than the expected return of stock Q

The expected growth rate of stock B is greater than the expected growth rate of stock A and the expected return of stock Q is greater than the expected return of stock Z

The expected growth rate of stock B is greater than the expected growth rate of stock A and the expected return of stock Z is greater than the expected return of stock Q

C)

If 1) the expected return for Bagus stock is 16.8 percent; 2) the dividend is expected to be $4.30 in one year, $0 in two years, $0 in three years, $8.50 in four years, and $9.60 in five years; and 3) after the dividend is paid in five years, the dividend is expected to begin growing by 1.3 percent per year forever, then what is the current price of the stock?

A. $45.94 (plus or minus $0.10) B. $41.53 (plus or minus $0.10) C. $36.74 (plus or minus $0.10) D. $70.18 (plus or minus $0.10) E. None of the above is within $0.10 of the correct answer

D)

Fatine has one share of stock and one bond. The total value of the two securities is $1,400. The stock pays annual dividends. The next dividend is expected to be $24.00 and paid in one year. In two years, the dividend is expected to be $14.00 and the stock is expected to be priced at $195.00. The stock has an expected return of 17.80 percent per year. The bond has a coupon rate of 13.60 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 4 years. What is the YTM of the bond?

A. 7.11% (plus or minus .03 percentage points B. 7.33% (plus or minus .03 percentage points C. 6.86% (plus or minus .03 percentage points D. 6.94% (plus or minus .03 percentage points E. None of the above is within .03 percentage points of the correct answer

F)

What is the expected dividend for a stock expected to be in 3 months if the stock is expected to pay a constant dividend every quarter forever, the expected return is 9.80% per year, the next dividend is expected in 3 months, and the stock is priced at $52.00?

A. An amount less than $0.00 or an amount equal to or greater than $5.20

B. An amount equal to or greater than $0.00 but less than $1.20 C. An amount equal to or greater than $1.20 but less than $2.20 D. An amount equal to or greater than $2.20 but less than $3.70

E. An amount equal to or greater than $3.70 but less than $5.20