Question
Objectives :- 1. The last dividend paid by New common stock was $5 per share. ($5...
Objectives :-
1. The last dividend paid by New common stock was $5 per share. ($5 =D0 here.) The dividends are expected to grow at 6% forever. If the required rate of return on New stock is 11% annually, what is the price of this stock?
a. $100
b. $ 93
c. $83
d) $106
2. The beta coefficient of a stock is a measure of its
a. unsystematic risk
b. systematic risk
c. total risk
d. company specific risk
e. two of the above
3. You purchased a bond for $1200 one year ago and plan to sell it today for $1350. Today, you receive your only interest payment for the year of $90. Your percentage return on this investment is _____.
- 20.0%
- 9.0%
- 17.8%
- 7.5%
- 18.4%
4. What is the expected market risk premium if the expected return on asset A is 14% and the risk free rate is 5%? Asset A has a beta of 1.5
- 6%
- 9%
- 12%
- 19.5%
- 13.5%
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