Increasing inflation would (everything else constant) would tend to: lower the Price/Earnings ratio of a company have no effect on the Price/Earnings ratio of a company decrease or increase the Price/Earnings ratio depending on the firm's standard deviation O raise the Price/Earnings ratio of a company Question 32 (3 points) Clinton Corporation is expected to pay a dividend of $3.60 next year and $5.50 the year after that. At this point (end of year 2 beginning of year 3) the growth rate in dividends is expected to be 0.05 into the foreseeable future. The required return on stock's of similar risk is 12%. What is the current price Po? Answer should be to nearest penny: ex: 20.32 Be sure to round correctly 20.326 would be 20.33 Which of the following statements concerning the constant growth stock valuation formula shown below is false: Po = D1/( kg) the model reflects (considers) risk dividends must remain unchanged the stock price is the present value of all the future dividends the dividends are assumed to grow at a constant ratre Question 30 (3 points) The Price-to-Sales ratio (P/S) was often used to value internet start-up companies because: the SEC required it the P/S ratio does not require that the company have earnings Question 27 (3 points) Trump corporation's stock sells for $49.30 and is expected to pay a dividend of 2.30 next year. Dividends are expected to grow at 0.03 percent into the foreseeable future. What is the expected dividend yield on Trump stock for the first year? Answer should be to 2 decimals---Ex .04 Be sure to round properly. ex. .036 rounds to .04 and .042 rounds to .04 Your Answer: Answer Question 28 (3 points) The stock valuation model below ignores capital gains: Po = D/ (1 + k)+ D2/(1 + k)2 + ........+ Doo / (1 + k). True False Trump corporation ix expected to pay a dividend of $3.00 next year (D) and has a beta of 0.8. Dividends are expected to grow at 3 percent into the foreseeable future. The expected return on the market is 0.13 the risk-free rate is 0.03. What is the required return on Trump stock? Answer should be to 2 decimals--- Ex: 34 Be sure to round properly. ex..336 rounds to.34 and 342 rounds to 34 Your Answer: Answer Question 26 (3 points) Trump corporation is expected to pay a dividend of 3.60 next year and has a beta of 2.0. Dividends are expected to grow at 0.03 into the foreseeable future. The required return on Trump stock is 0.17 What should Trump stock sell for now? Answer should be to 2 decimals --- Ex: 29.42 . Be sure to round properly. ex. .336 rounds to .34 and 342 rounds to .34