Finance Chapter 1-5, 7-10

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1. Barker Corp. has a beta of 1.10, the real risk-free rate is 2.00%, investors expect a 3.00% future inflation rate, and the market risk premium is 4.70%. What is Barker's required rate of return?
Answer
D
| | |
|2010 |21.00% |
|2009 |-12.50% |
|2008 |25.00% |
| | |

Answer
B
| |20.08% | | | |20.59% | | | |21.11% | | | |21.64% | | | |22.18% | |
4. Which
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| | | |These two stocks should have the same expected return. | | | |These two stocks must have the same expected capital gains yield. | | | |These two stocks must have the same expected year-end dividend. | | | |These two stocks should have the same price. | |
9. Stocks A and B have the same price and are in equilibrium, but Stock A has the higher required rate of return. Which of the following statements is CORRECT?
Answer
A | |Stock B must have a higher dividend yield than Stock A. | | | |Stock A must have a higher dividend yield than Stock B. | | | |If Stock A has a higher dividend yield than Stock B, its expected capital gains yield must be lower than Stock B's. | | | |Stock A must have both a higher dividend yield and a higher capital gains yield than Stock B. | | | |If Stock A has a lower dividend yield than Stock B, its expected capital gains yield must be higher than Stock B's. | |10. Two constant growth stocks are in equilibrium, have the same price, and have the same required rate of return. Which of the following statements is CORRECT?
Answer
| |If one stock has a higher dividend yield, it must also have a lower dividend growth rate. | | | |If one stock has a higher dividend yield, it must also have a higher dividend growth rate. | | | |The two stocks must have the same dividend growth rate. | | | |The two stocks must have the same dividend yield. | | | |The two stocks must have the same dividend per share. | |

11. Which of the following statements

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