33) Other things being the same, which factors would increase a firm's P/E ratio?

Multiple Choice

• a) an increase in the dividend payout ratio
• b) an increase in investor's risk aversion
• c) a decrease in firm's risk
• d) a decrease in firm's plowback ratio

34) RTS, Inc. just paid a $4 dividend per share. Investors require a return of 15%, and RTS is expected to have a ROE of 13%. What is the value of RTS common stock if it plans to maintain a 60% dividend payout ratio?

Multiple Choice

• a) $26.67
• b) $35.19
• c) $42.94
• d) $59.89

35) What the price should be for a preferred stock which pays out $4.80 dividend per share and you require a return of 5% for this preferred stock?

Multiple Choice

• a) $11.25
• b) $112.50
• c) $45
• d) $96.00

36) ABC, Corp. had an earnings of $7.5 million a year ago, with 1 million shares outstanding. How much dividend ABC, Corp. paid out last year if it plowed back 40% of its earnings?

Multiple Choice

• a) $3.00
• b) $3.75
• c) $4.50
• d) $7.50

37) What effect (positive or negative) each of the following factors would have on the value of the stock?

(And, briefly explain why)

1. Growth rate

2. Future dividend income

3. Required rate of return

Please provide working?