1. The Bell Weather Co. is a new firm in a rapidly growing industry. The company

Question

1. The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20% a year for the next four years and then decreasing the growth rate to 5% per year. The company just paid its annual dividend in the amount of $1.00 per share. What is the current value of one share if the required rate of return is 9.25%?

A.

$35.63

B.

$38.19

C.

$41.05

D.

$43.19

E.

$45.81

2. A year ago, you purchased 300 shares of IXC Technologies, Inc. stock at a price of $9.03 per share. The stock pays an annual dividend of $.10 per share. Today, you sold all of your shares for $28.14 per share. What is your total dollar return on this investment?

A.

$5,703

B.

$5,733

C.

$5,753

D.

$5,763

E.

$5,853

3. A stock has an expected rate of return of 8.3% and a standard deviation of 6.4%. Which one of the following best describes the probability that this stock will lose 11% or more in any one given year?

A.

less than 0.5%

B.

less than 1.0%

C.

less than 1.5%

D.

less than 2.5%

E.

less than 5%

A.

$35.63

Explanation / Answer

C

B

C

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