Choose the correct Answers :

1.A decrease in which of the following will increase the estimatedvalue of a stock according to the dividend discount model?

a.Dividend amount

b. Dividend growth rate

c. Both the required rate of return and the dividend growth rate

D.Required rate of return

2.Which of the following is a feature of common stock?

a.Votefor board of directors

b.Maturity date

c.Return of capital to shareholders

D.Receive interest payments

3.A firm has a Price to Earnings (PE) ratio of 18.7 and Earnings Per Share of $4.18 (annual).What is the firm's stock price per share?

A.$18.70

B.$4.47

C.$22.00

D$78.17

4.What is the primary source of a company's stock price appreciation?

A.Company investment of retained earnings

B.Company investment of dividends

C. Shareholder investment of dividends

D. Shareholder investment of retained earnings

5.A firmis planning on increasing its annual dividend by 3.50% a year in perpetuity. The company just paid its annual dividend in the amount of $.20 per share. What is the current value of one share of this stock if the required rate of return is 15.50%?

A.$2.04

B.$1.67

C.$1.73

D.$1.34