(I will cancel the question if all three are not answered by hand) 1)Today the Gamma Corporation has just paid an annual dividend of $2 per share. You expect the annual dividends to grow at a constant rate of 3% forever. Find the present value of the all future cash dividends if the appropriate required rate of return per year is 13%. Show your work. 2)Given the following information on securities E and F, calculate the expected return and standard deviation of returns on the portfolio consisting of 50% invested in E and 50% invested in F.

Security ESecurity F

Expected Return 12% 5%

Standard Deviation of Returns 10% 20%

Correlation coefficient of returns -0.80 3)Security analysts at Smith Blarney have assigned the following probability distributions to the rates of return on Phoenix and LV stocks one year from now as follows:

States	Return(%)	Probability
Phoenix	LV
Worst	-20	-10	0.2
Bad	0	0	0.3
Normal	20	10	0.3
Good	40	20	0.2

For each question find the following answers:

• a)Find the expected rate of return on each stock.
• b)Find the standard deviation of each stock
• c)Find covariance and correlation coefficient of the two stocks.