Questions are attached.
1. You just purchased preferred shares in Initech for $45.71. Initech pays annual dividends of $0.64. What is your required return on this investment?
A. 1.40%
B. 8.50%
C. 14.00%
D. 5.40%
E. 10.00%
2. If Genco's preferred stock pays a dividend of $5 per share and its investors require an 8% return, what should its price per share of preferred stock be?
A. $6.25
B. $12.75
C. $ .40
D. $50.00
E. $62.50
2. Coors just paid out a dividend of $1.00 on its common stock, which is currently trading at $37.27. If dividends are paid annually and are expected to grow in value by 1% per annum forever, then what return will a shareholder earn if the stock is purchased today?
A. 2.68%
B. 5.03%
C. 101.00%
D. 2.71%
E. 3.71%
4. Cherry Auto Sales just opened and does not expect to pay a dividend during its first year. At the end of its second year, Cherry's owners expect to pay a $2.00 dividend and plan to increase it 7% annually. If the required return is 20%, what should Cherry's stock price be?
A. $15.48
B. $13.06
C. $11.42
D. $12.82
E. $10.92
5. Mammoth Mart's common shares are currently trading for $59.85 and the company paid its annual dividend of $0.60 per share. If your required rate of return is 12%, what is the implied growth rate in dividends? (Assuming that dividends are expected to grow at a constant rate in perpetuity.)
A. 1.00%
B. 11.46%
C. 11.00%
D. 10.89%
E. 8.46%
6. A share of common stock has a current price of $82.50 and is expected to grow at a constant rate of 10 percent. If you require a 14% rate of return, what is the current dividend of this stock?
A. $4.75
B. $3.30
C. $6.13
D. $4.29
E. $3.00
7. If the last dividend on Markowitz Trucking stock was $2 per share and if dividends are expected to grow 10% annually, what is the share price if the required return is 12%?
A. $155
B. $110
C. $100
D. $130
E. $125
8. Berg Inc. has just paid a dividend of $2. Its stock in now selling for $48 per share. The firm is half as risky as the market. The expected return on the market is 14%, and the yield on U.S. Treasury bonds is 11%. If the market is in equilibrium, what rate of growth is expected?
A. -2%
B. 10%
C.8%
D. 13%
E. 4%
9. The last dividend paid on Minsky Corp. stock was $3 per share. If Minsky investors require a 10% return, what should the share price be if the dividend payments are not expected to change?
A. $ 30
B. $300
C. $ 40
D. $33
E. $ 3
10. If the price of River Bank stock is $35, next year's dividend is expected to be $2.50, and the required return is 15%, what is the expected dividend growth rate?
A. 5.2%
B. 7.9%
C. 12.0%
D. 13.0%
E. 15.0%
