1.The rate of return on the risk-free asset is 3 percent.What is the expected return of the overall stock market if the market risk premium is 5 percent?

2.Continuing from the previous problem, note that Company has a beta of 1.3. What is the required rate of return for the company? (Use the market data, e.g. risk-free rate, etc. from the previous problem.)

3.Banana Company just paid a dividend of $5 per share. If dividends have a growth rate of 5 percent and you require 12 percent return, what is the value of the stock?

4.Slow decline Company just paid a dividend of $2.50 per share. If dividends have been declining at a constant rate of 2 percent and you require 10 percent return, what is the value of the stock?

Answer rating: 100% (QA)

1 The expected return of the overall stock market can be calculated using the Capital Asset Pricing ... View the full answer