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1.An investor evaluating a company’s common stock has gathered the followinginformation: Current dividend per share=$2.40 Dividend growth rate expectedduring Years 1 to 2=20% Dividend growth rate expected from Year 3 onward=4%Company’s weighted average cost of capital=13% Required rate of return onequity=15% The intrinsic value per share of this common stock is closest to: 选项： A:$24.86 B:$26.59 C:$29.82

2.New Company's sales and profits are growing rapidly, and so is its dividend. Its dividend is growing at an annual rate of 25%. This growth in the dividend is expected to continue for two years. After that, the rate of growth is expected to slow down to 10% per year. The investors' required rate of return on the stock is 16%. The next annual dividend is expected to be $1.00. The beta of New Company's stock is 1.5. The U.S. Treasury bill rate is 4%. What is the risk premium of the market? A. 16% B. 12% C. 4% D. 8%

3. New Company's sales and profits are growing rapidly, and so is its dividend. Its dividend is growing at an annual rate of 25%. This growth in the dividend is expected to continue for two years. After that, the rate of growth is expected to slow down to 10% per year. The investors' required rate of return on the stock is 16%. The next annual dividend is expected to be $1.00. The beta of New Company's stock is 1.5. The U.S. Treasury bill rate is 4%. What is an appropriate market price for New Company's stock? A. $18.88 B. $13.80 C. $4.00 D. $23.00

4.Super Computer Company's stock is selling for $100 per share today. It is expected that, at the end of one year, it will pay a dividend of $6 per share and then be sold for $114 per share. Calculate the expected rate of return for the shareholders. 选项： A、20 percent B、15 percent C、10 percent D、25 percent

5.Suppose you know that a company’s stock currently sells for $65 per share and the required return rate on the stock is 11%. You also know that the total return on the stock is evenly divided between capital gain yield and dividend yield. If it’s the company’s policy to always maintain a constant growth rate i this dividends, what is the current dividend per share?

6.Gremlin Industries will pay a dividend of $1.90 per share this year. It is expected that this dividend will grow by 4% per year each year in the future. The current price of Gremlin's stock is $23.50 per share. What is Gremlin's equity cost of capital?选项： A:11%; B:12%; C: 14%; D:16%

7.The Constant Growth Corporation (CGC) has expected earnings per share of $5. It has a history of paying cash dividends equal to 20% of earnings. The market capitalization rate for CGC’s stock is 15% per year, and the expected ROE on the firm’s future investments is 17% per year. Using the constant growth rate discounted dividend model, what is the model’s estimate of the present value of the stock?选项： A:$91.429; B:$81.429; C:$71.429; D:$61.429

8.The value of a supernormal growth firm's common stock is the present value of the: 选项： A、first year's dividend after the supernormal growth period. B、expected stock price at the start of the supernormal growth period. C、first year's dividends multiplied by (1 - the supernormal growth rate), divided by the required rate of return. D、expected stock price at the end of the supernormal growth period.

9.The GPC Corporation has expected earnings per share (E1) of $10. It has a history of paying cash dividends equal to 60% of earnings. The market capitalization rate for GPC’s stock is 10% per year, and the expected ROE on the firm’s future investments is 15% per year? Using the constant growth rate discounted dividend model,(1) What is the expected growth rate of dividends?(2) What is the model’s estimate of the present value of the stock?(3) If the model is right, what is the expected price of a share a year from now?(4) Suppose that the current price of a share is $300, by how much would you have to adjust each of the following model parameters to “justify” this observed price:a. The expected ROE on the firm’s future investments.b. The market capitalization rate

10.A firm is expected to pay a dividend of $1.next year and the dividend is expected to grow at a constant rate of 4 percent over time. Some investors have required returns on investments in equity of percent, some percent, and some 8 percent. The market price of this firm’s stock will be slightly above _________. 选项： A、$25 B、$18 C、$16.67 D、$12.50

11.Stock A has a required return of 10 percent. Its dividend is expected to grow at a constant rate of 7 percent per year. Stock B has a required return of 12 percent. Its dividend is expected to grow at a constant rate of 9 percent per year. Stock A has a price of $25 per share, while Stock B has a price of $40 per sharE. If the stock market were efficient, these two stocks should have the same pricE.（）

12.B&K Enterprises will pay an annual dividend of $2.10 a share on its common stock next year. Last week, the company paid a dividend of $2.00 a share. The company adheres to a constant rate of growth dividend policy. What will one share of B&K common stock be worth ten years from now if the applicable discount rate is 9%?选项： A: $71.16; B:$74.01; C:$76.97; D: $80.05; E: $85.52

13.Stock A has a required return of 10 percent. Its dividend is expected to grow at a constant rate of 7 percent per year. Stock B has a required return of 12 percent. Its dividend is expected to grow at a constant rate of 9 percent per year. Stock A has a price of $25 per share, while Stock B has a price of $40 per sharE. If the stock market were efficient, these two stocks should have the same pricE.（）选项： A:对 B:错

14.Credenza Industries is expected to pay a dividend of $1.70 at the end of the coming year. It is expected to sell for $62 at the end of the year. If its equity cost of capital is 9%, what is the expected capital gain from the sale of this stock at the end of the coming year?选项： A:3.56 B:56.88 C:5.12 D:58.44

15.What should you pay for a stock if latest year's annual dividend was $5, the constant-growth rate is 2%, and you require a 12% rate of return?

16.Assume Time Warner shares have a market capitalization of $60 billion. The company is expected to pay a dividend of $0.30 per share and each share trades for $40. The growth rate in dividends is expected to be 7% per year. Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 8%. If the firm's tax rate is 35%, compute the WACC? 选项： A:6.40% B:6.76% C:7.11% D:6.05%

17.The common stock of Neal’s Metal Works sells for $32.89 a share. The company recently paid their annual dividend of $1.80 per share and expects to increase this dividend by 2.5 percent annually. What is the rate of return on this stock?选项： A:5.61 percent; B:7.84 percent; C:7.97 percent; D:8.11 percent

18.XYZ stock is expected to pay a dividend of $2 per share a year from now, and its dividends are expected to grow by 6% per year thereafter. If its price is now $20 per share, what must be the market capitalization rate?选项： A:16.3%; B:16.8%; C:16.0%; D:15.6%

19.An equity analyst is tracking the stock price of an Information Technology (IT) company. The company’s share currently trades at a price of $50. Based on the company’s financial statements, the analyst predicts that the company would pay a dividend of $3 and $4 in the next two years. He also forecasts that the company’s shares would trade at $60 at the end of these two years. For an investor with a required rate of return of 10%, the best course of action would most likely be to: 选项： A: buy shares of the stock. B: short-sell shares of the stock. C: neither buy nor short-sell shares of the stock.

20. AB Corporation’s equity section shows the following information:;Capital stock, $2.50 par value, 4,000 shares issued $ 10,000;Additional paid-in capital is $ 40,000;The price of the company’s share is currently $14 per share. This means that the original investors paid 选项： A、 The selling price of the capital stock cannot be determined from the information given. B、 $12.50 per share. C、 $11.50 per share. D、 $2.50 per share. E、 $14.00 per share.

21.Shiller Corporation will pay a $2.75 per share dividend next year. The company pledges to increase its dividend by 5 percent per year, indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company’s stock today?$_____

22.Stocks a and b have the same price, but Stock a has a higher required rate of return than Stock b Which of the following statements is most correct? ( )选项： A:Stock a must have a higher dividend yield than Stock b. B:Stock b must have a higher dividend yield than Stock a. C:If Stock a has a lower dividend yield than Stock B, its expected capital gains yield must be higher than Stock b’s. D:If Stock a has a higher dividend yield than Stock B, its expected capital gains yield must be lower than Stock b’s. E:Stock a must have both a higher dividend yield and a higher capital gains yield than Stock b.

23.Angelina's made two announcements concerning its common stock today. First, the company announced that its next annual dividend has been set at $2.16 a share. Secondly, the company announced that all future dividends will increase by 4% annually. What is the maximum amount you should pay to purchase a share of Angelina's stock if your goal is to earn a 10% rate of return? （）选项： A:$21.60 B:$22.46 C:$27.44 D:$34.62