1. You got a high-paying job as a security analyst for a hedge fund. Your employer wants your opinion about XWZ common stock which currently sells for $92.50 per share and which recently paid a dividend of $3.94 per share. Over the last ten-years dividends per share have grown steadily at an annual rate of 5.11%. You believe that they will continue to grow at the same rate for the indefinite future. If he requires a rate of return of 12.5%, you will tell him that,
2. The common stock of the Golden Goose paid $0.90 in dividends last year. If you require a rate of return of 10%, what is the highest price that you would be willing to pay for the stock if dividends are expected to grow at a 7% rate for the indefinite future?
3. A professor bequeaths $100,000 to a college with the stipulation that it be placed in a trust and invested in common stocks for 100 years, at which point all of the funds are to be used for scholarships. How much will be available for scholarships, if the funds earn a 9.5% AC rate?
4. You bought a stock for $21/shr. and sold it one year later for $18.10 after collecting a $1.12 dividend. What rate of return did you earn?
5. Which of the following personal loans has the highest interest rate?