Question

Question 10

Which of the following changes will make the value of a stock go down, other things being held constant?

		The required return increases.
		The required return decreases.
		The growth rate of dividends increases.
		In general, investors become less risk averse.

Question 3

Stock A has the following returns for various states of the economy:

State of
the Economy Probability Stock A's Return
Recession 5% -15%
Below Average 25% -2%
Average 40% 9%
Above Average 25% 14%
Boom 5% 15%

Stock A's expected return is:

		6.60%
		7.35%
		8.35%
		8.85%

Question 1

Emery Company is expected to pay a dividend of $2.25 per share. The company's stock is currently selling for $60 per share, and the required rate of return on Emery Company stock is 16%. What is the growth rate expected for Emery Company dividends assuming constant growth?

		13.92%
		11.81%
		12.25%
		13.63%

Answer 1