QUESTION $5$

Jones Pharmaceuticals currently trades for $$25$ per share. Analysts of a prestigious investment bank expect

the company to pay dividends of $$1\mathrm{.}2$ per share next year, and $$1\mathrm{.}4$ per share two years from now, at which

point the stock could be sold for $$26$ per share. They also estimate the discount rate of equity cash flows to

be $10\%.$ Based on the analysts' forecasts, compute the fundamental value of the stock?

A$.$ $$21\mathrm{.}57$

B$.$ $$31\mathrm{.}50$

C$.$ $$23\mathrm{.}74$

D$.$ $$11\mathrm{.}50$

QUESTION $6$

You invest $$200$ in security A which has a beta of $1\mathrm{.}4$ and $$800$ in security B which has a beta of $0\mathrm{.}3.$ The beta

of your portfolio is$?$

A$.0\mathrm{.}61$

B$.0\mathrm{.}37$

C$.0\mathrm{.}22$

D$.0\mathrm{.}52$