A)Alpha company is expected to pay $3.36 in dividends in the coming year. The dividends are expected to grow at 9% per year. Assume that the market portfolio return and T-bills return are respectively equal to 14% and 4%. The current stock price is $104. Determine the beta of Alpha company. *

5 points

a. 0.823

b. 1.623

c. 0.457

d. 1.523

e. None of the above

B)Rotter Inc.s current ROE is 20% and its earnings retention ratio is 55%. Its expected earnings for next year are $3 per share. Assume that the market capitalization rate is 13%, what is the firms present value of its growth opportunities? *

4 points

a. $18.17

b. $51.85

c. $44.42

d. $21.89

e. None of the above

C)Anglo Co. has developed a new product. Therefore, its ROE is expected to be 22% next year, and its earnings retention ratio will be maintained at 20%. Next years earnings are expected to be $3 per share and the investors are expecting a 14% rate of return on the stock. What will be Anglo Co.s stock price after 4 years? *

5 points

a. $25.00

b. $29.70

c. $30.25

d. $33.64

e. None of the above

D)Gamma portfolio generates an annual return of 12%, while the market portfolio generates an annual return of 14%. The standard deviations for Gamma and the market portfolios are 17% and 20% respectively. If the T-bills rate is 6% and Gammas beta is 0.5, what is Jensens alpha of Gamma? *

3 points

a. 4.64%

b. 4.40%

c. 4.00%

d. 2.00%

e. None of the above