What must occur for a stock to be in equilibrium, that is, for there to be no consistent pressure for its price to depart from its current level?

	a.	The past realized return must be equal to the expected return during the same period.
	b.	The expected future returns must be equal to the required return.
	c.	The required return must equal the realized return in all periods.
	d.	The expected future return must be less than the most recent past realized return.

A common share just paid a dividend of D₀ = $1.90. The required rate of return is r_s = 7.0%, and the constant growth rate is g = 4.0%. What is the current share price?

	A.	65.87
	B.	73.70
	C.	60.90
	D.	63.33

McDonnell Manufacturing is expected to pay a dividend of $1.20 per share at the end of the year (D₁ = $1.20). The stock sells for $33.00 per share, and its required rate of return is 14.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?

	A.	14.50%
	B.	10.36%
	C.	11.22%
	D.	10.86%