1. ABC international paid $3.00 annual dividend on common stock and promises that the dividend will grow by 5% per year. If the stocks market price for today is $25, what is the required rate of return?

2. A start-up technology company has projected earnings per share of $3.50. If the average technology industry P/E ratio is 40, what would the companys projected stock price be?

3. Discuss your understanding of the risks an investor would face when making an investment in corporate bonds?

4. What exactly is the distinction between default risk and risk premium? How can default risk influence interest rates?