Question $1(2\mathrm{.}5$ points$)$

Stock A has an expected return of $15\%.$ If the risk$-$free rate is $2\%$ and the market

risk premium is $5\%,$ what is Stock $A^{\text{'}}\text{'}$s beta?

$1\mathrm{.}6$

$3\mathrm{.}5$

$2\mathrm{.}6$

$1\mathrm{.}0$

$1\mathrm{.}2$

Question $2(2\mathrm{.}5$ points$)$

A stock that pays dividends that are expected to increase at the same rate forever is

best described as:

Zero growth

Constant growth

Supernormal growth

Negative growth

None of the above is correct