8. Which of the following is a problem using the dividend discount model to value common stock? * A) The model does not account for the risk of the stock. B) The model does not consider the present value of the dividends. C) The model does not consider that dividends may not be paid D) The model does not account for small dividends. 9. The capital market line (CML) uses ____ as a risk measurement, whereas the capital asset pricing model (CAPM) uses ____. * A) Beta; total risk B) Standard deviation; total risk C) Standard deviation; systematic risk D) Unsystematic risk; total risk 10. Lee Suns has sales of $3,000, total assets of $2,500, and a profit margin of 5%. The firm has a total debt ratio of 40%. What is the return on equity? * A) 6% B) 8% C) 10% D) 12% 11. Which one of the following terms is defined as dividends paid expressed as a percentage of net income? * A) dividend retention ratio B) dividend yield C) dividend payout ratio D) dividend portion 12. Monamy invested $9,250 in an account that pays 6 percent simple interest. How much more could he have earned over a 7-year period if the interest had compounded annually? * A) $741.41 B) $773.58 C) $802.16 D) $833.33