1.It is more difficult to value a stock than it is to value a bond because:

A. The future cash flows of a stock are known.

B. The life of an equity security is limited.

C. The required market rate of return on a stock is known in advance.

D. Equity securities have no maturity date.

2. You are attempting to value the shares of a new, high-technology firm in a developing industry. You would most likely:

A. use the growth dividend model

B. use the non-constant growth dividend model

C. use the zero growth dividend model

D. find the value by valuing the stock as a perpetuity

3. The dividend growth model:

I. assumes that dividends increase at a constant rate forever

II. can be used to compute a stock price at any point in time

III. can be used to value zero-growth stocks

IV. requires the growth rate to be less than the required return

A. I and III only

B. II and IV only

C. I, II, and IV only

D. I, II, III, and IV