Which of the following is a FALSE statement? a) The annual percentage rate (APR) on a loan requiring interest rate you actually pay monthly payments is the annual the interest rate you actually pay. b) When comparing investments it is best not to rely solely on quoted rates. c) Compounding will typically lead to differences between quoted and effective rates. d) With monthly compounding, the annual percentage rate (APR) will be smaller than the effective annual rate You are considering two perpetuities which are identical in every way, except that perpetuity A will begin making annual payments of existP to you two years from today while the first existP payment for perpetuity B will occur one year from today. It must be true that the present value of perpetuity _____ a) A is greater than that of B by existP b) B is greater than that of A by existP c) B exceeds that of A by the present value of existP for one year d) A exceeds that of B by the present value of existP for one year Given no change in required return (R), the price of the stock whose dividend is constant will _____. Assume that the required return on the stock is positive. a) Remain unchanged b) Increase over time at a rate of r% c) Decrease over time at a rate of r% d) Decrease over time at a rate equal to the dividend growth rate According to the constant dividend growth model (or Gordon model), which of the following statement is incorrect? a) Assume that the required rate of return on a given stock is 13 percent. If the stock's dividend is growing at a constant rate of 5 percent, its expected dividend yield is 8 percent b) A stock's expected dividend yield must equal the expected growth rate. c) The expected dividend yield on a stock is equal to the required rate of return less the expected capital gains yield d) A stock's expected capital gains yield can be greater than the expected dividend yield