31a) Misperceptions regarding beta are all too common in textbooks and on the internet. Which of the 8 following statements are false? (1) Beta is equal to systematic risk. (2) A stock with a beta of two, has twice as much systematic risk as the broad stock-market. (3) Beta is the link between systematic risk and expected return. (4) (1) and (2) (5) (1) and (3) (6) (2) and (3) (7) (1), (2) and (3) (8) None of the above. Enter a value from 1 to 8 - based upon your best answer

31b) You're interested in LoRa's common stock. You view the firm as having two different patterns of cash flows in the future which you think of as stage 1 and stage 2. In the first stage, which lasts until 8 years from today, you expect the firm to pay no dividends. During this first stage, you expect earnings to grow from their current level at a rate of 8.4% per year. The firm recently announced earnings per share for the prior 12 months of $6.16 per share.

Beginning 8 years from today, you expect the second pattern (stage) of cash flows to begin. During this second stage, the firm is expected to have a constant ROE of 8.4% per year, and a constant Payout Ratio of 22%. The first dividend will be paid 9 years from today (from annual earnings ending 9 years from today).

Based on the stock's risk, you've estimated that the fair discount rate for the stock is 10.2% per year, when measured as an EAR.

You have been asked to determine the terminal P/E ratio (i.e. at the end of the first stage, at t = 8), using the following year's earnings.

Provide an answer with at least 4 digits of precision.