CAN ANYONE HELP ME WITH THIS, please give solution on question 10-20

1 ) The upper limit on common stock dividends, which is set by the SEC, is generally equal to the sum of dividends paid on the company's preferred stock.

A. TRUE B. FALSE

2) Preferred stock is less risky than common stock, but more risky than debt.

A. TRUE B. FALSE

3) The expected rate of return from an investment is equal to the expected cash flows divided by the initial investment.

A. TRUE B. FALSE

4) Beta cannot be negative.

A. TRUE B. FALSE

5) The Beta of a T - bill is one .

A . TRUE B. FALSE

6) The common stock of a constant - growth firm is valued in the same manner as its preferred stock.

A. TRUE B. FALSE

7) According to the CAPM, for each unit of beta, an asset's required rate of return increases by the market's return .

A. TRUE B. FALSE

8) The portfolio beta is simply the sum of the betas of the individual stocks in the portfolio.

A. TRUE B. FALSE

9 ) The category of securities with the highest historical r isk premium is

A) Large company stocks.

B) Small company stocks.

C) Government bonds.

D) Small company corporate bonds.

10) Stimpson Inc. preferred stock pays a $1.50 annual dividend. What is the value of the stock if your required rate of return is 10%?

A) $.15

B) $1.50

C) $15.00

D) $150.00

11) Backford Company just paid a dividend yesterday of $ 5 per share. The company's stock is currently selling for $ 10 0 per share, and the required rate of return on Backford Company stock is 1 0 %. What is the growth rate expected for Backford Company dividends assuming constant growth?

A) 3 . 3 7%

B) 4 . 76 %

C) 5 . 6 7%

D) 7 . 65 %

12) The Western State Company's common stock is expected to pay a $ 4 .00 dividend in the coming year. If investors require a 1 2 % return and the growth rate in dividends is expected to be 8%, what will the market price of the stock be?

A) $10

B) $100

C) $108

D) $118

13) You bought Microsoft stock at $ 10 0 per share, hold the stock for 5 years. The company paid $6, $5 , $6, $10 and $6 dividends in year 1, 2 , 3, 4 and 5 resp. How much would the stock price have to appreciate for you to meet your required rate of return of 6 3%?

A) $120

B) $130

C) $148

D) $168

14) Dynamic Industries paid a dividend of $ 5 on its common stock yesterday. The dividends of Wallace Industries are expected to grow at 10 % per year indefinitely. If the risk free rate is 4 % and investors' risk premium on this stock is 11 %, estimate the value of Wallace Industries stock 3 years from now.

A) $136.84

B) $146.41

C) $151. 51

D) $164.31

15) You hold a portfolio with the following securities:

Security Value Beta Expected Return

Driscol Corporation 20% 3.20 36.0%

Evening Corporation 40% 1.60 20.0%

Frolic Corporation 40% 0.20 6.0%

What is the expected return for the portfolio?

A) 17.60%

B) 20.67%

C) 23.54%

D) 28.59%

16) Stock Z has an expected return of 16% with a standard deviation of 16%. If returns are normally distributed, then approxima tely two - thirds of the time the return on stock Z will be

A) Between 16% and 32%.

B) Between 0% and 16%.

C) Between - 16% and 16%.

D) Between 0% and 32%.

17) Assume that you have $200,000 invested in a stock that is returning 5%, $200,000 invested in a stoc k that is returning 10%, and $400,000 invested in a stock that is returning 20%. What is the expected return of your portfolio?

A) 10.00%

B) 13.75%

C) 15.00%

D) 17.50%

18) The risk - free rate of interest is 3% and the market risk premium is 5%. Howard Corpo ration has a beta of 2.0, and l ast year generated a return of 8 % with a standard deviation of returns of 27%. The required return on Howard Corporation stock is

A) 13 %.

B) 2 4%.

C) 35 %.

D) 4 2%.

19) If you hold a portfolio made up of the following stocks:

Investment Value Beta

Stock X $4,000 1.5

Stock Y $5,000 1.0

Stock Z $1,000 0.5

What is the beta of the portfolio?

A) 1.33

B) 1.24

C) 1.15

D) 1.00

20) An investor currently holds the following portfolio:

Amount Inves ted

8,000 shares of Stock A $16,000 Beta = 1.3

15,000 shares of Stock B $48,000 Beta = 1.8

25,000 shares of Stock C $96,000 Beta = 2.2

If the risk - free rate of return is 2% and the market risk premium is 7%, then the required return on the portfolio is

A ) 14.91%

B) 15.93%

C) 21.91%

D) 23.93%