The Francis Company is expected to

pay a dividend of $D_1=$$$1\mathrm{.}05$ per

share at the end of the year, and

that dividend is expected to grow

at a constant rate of $6\mathrm{.}00\%$ per

year in the future. The company's

beta is $1\mathrm{.}15,$ the market risk

premium is $5\mathrm{.}50\%,$ and the risk$-$free

rate is $3\mathrm{.}50\%.$ What is the

company's current stock price?

a$.$ $$27\mathrm{.}45$

b$.$ $$29\mathrm{.}62$

c$.$ $$30\mathrm{.}36$

d$.$ $$31\mathrm{.}12$

e$.$ $$32\mathrm{.}68$

If $D_1=$$$1\mathrm{.}25,g($which is

constant$)=4\mathrm{.}7\%,$ and $P_0=$$$26\mathrm{.}00,$

what is the stock's expected

dividend yield for the coming year?

a$.4\mathrm{.}12\%$

b$.4\mathrm{.}34\%$

c$.4\mathrm{.}57\%$

d$.4\mathrm{.}81\%$

e$.5\mathrm{.}19\%$

If in the opinion of a given

investor a stock's expected return

exceeds its required return, this

suggests that the investor thinks

a$.$ the stock is experiencing

supernormal growth.

b$.$ the stock should be sold.

c$.$ the stock is a good buy.

d$.$ management is probably not

trying to maximize the price per

share.

e$.$ dividends are not likely to be

declared.