1. The relationship between the two key elements of the constant dividend growth model is 5) A.that Dt+1 is less than the prior one, Dt. B.that the growth rate is always positive and greater than the discount Cassumes the growth rate is always less than the discount rate rate. D.Both A and B. E.Both B and C 2. A firm's value increases when it invests in projects that have 5 A.a rate of return less than the discouploate. B.a rate of return equal to the discount rate. CC.a rate of return greater than the discount rate. D.a rate of return equal to or less than the discount rate. E.None of the above. 3. The value of common stock today depends on 533 A. the expected future holding period and the discount rate. B.the expected future dividends and the capital gains. C.the expected future dividends, capital gains and the discount rate. D.the expected future holding period and capital gains. E.None of the above. 4. The formula Po=DIV/r represents 53 A.the present value of dividends in perpetuity. B.the value of a no growth dividend stream. Ca lower value than if a growth element was included. D. All of the above. E.None of the above. 5. A stock you are interested in paid a dividend of $1 last year. The anticipated growth rate in dividends and earnings is 5%. The discount rate is 10%. Calculate the expected price of the stock A.10 B.15 C.20 D.21 E.24 6. A consolis selling at $1,200 with an interest rate of 5%. How much would this bond sell for if the interest rate were 8% instead? CA.200 B.750 C.1000 D.1650 E. 1920 7. The coupon of a bond is A.its time period to maturity. B.its current price Cits face value. D.its yield to maturity. E.the amount of the interest payment. 8. A level coupon bond A.pays the same principal every period. B.pays the same taxes every period. C.is a zero coupon annuity. D.pays an annuity over the life of the bond. E.None of the above