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QUESTION 1 Jarett & Sons's common stock currently trades at $50.00 a share. It is expected to pay an annual dividend of $5.00 a share
QUESTION 1 Jarett & Sons's common stock currently trades at $50.00 a share. It is expected to pay an annual dividend of $5.00 a share at the end of the year, and the constant growth rate is 4% a year. If the company issued new stock, it would incur a 10% flotation cost. What would be the cost of equity from new stock? O 12.5% O 14.8% O 15.1% O 13.4% QUESTION 2 Assume expectations hypothesis is true. Today, a 1-year bond has an annualized rate of return of 10% per year. A 2-year bond has an annualized rate of retum of 12% per year. A 3-year bond has an annualized rate of retum of 15% per year. What is the forward rates for a 1-year bond in the second year? O 21.2% O 20.4% 25.9% O 14.0%
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