Susan used the Constant Dividend Model to value a company's stock. The model signiticantly

underpriced the stock. What is a likely reason why? [If you believe there is more than one correct

answer, then choose the MOST CORRECT].

A) Susan failed to account for the fact that dividends are likely to grow in the tuture.

B) Susan used a discount rate that was too low.

C) Susan should have the company's P/E ratio instead.

D) Susan should only use that model to evaluate the price of preferred stock

E) None of the above.

The LMNOP company has a series of bonds outstanding that have a 2.04% Yield-to-Maturity, cost

$1100 each, and pay a 3.4% coupon rate. What is their term-to-maturity? Round to the nearest

whole number.

A) 8 years

B) 16 years

C) 5 years

D) 4 years

E) Insufficient information to answer the question.