Question: Q1. State whether the following statement is True or False and explain why. The return on a risk-free asset and the return on any common

Q1. State whether the following statement is True or False and

Q1. State whether the following statement is True or False and explain why. "The return on a risk-free asset and the return on any common stock are perfectly negatively correlated." (10 marks) Q2. Company X is expected to pay an end-of-year dividend of $5 a share. After the dividend its stock is expected to sell at $110. If the market capitalization rate is 8%, what is the current stock price? (10 marks)

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