Stewart Industries expects to pay a $3.00 per share dividend on its common stock at the end of the year. The dividend is expected to grow 25% a year until t=3 after which time the dividend is expected to grow at a constant rate of 5% a year. The stocks beta is 1.2, the risk free rate of interest (R_f) is 6% and the rate of return on the market (R_m) is 11%. Use the CAPM equation to find the required rate of return: R_s = R_f + (R_m-R_f)*beta.

What is the companys current stock price?

1. $60.00
2. $55.75
3. $59.05
4. $45.60
5. $70.00
6. $77.90

The dividend yield and capital gains yield at the end of year 1 are:

1. 5.08%; 6.92%
2. 6.00%; 6.00%
3. 6.12%; 5.88%
4. 5.80%; 6.90%
5. 12%; 10%
6. 5.9%; 2%