Harvey-Danielson’s stock is currently trading at a market price of $44.48.  The company just paid an annual dividend (D0) of $1.47.  The current risk-free rate is 2.98% annually, and you can expect a market return of 11%.  The stock’s Beta is 0.9.  What is the market’s implied growth expectation for Harvey-Danielson’s dividends if all market participants use a constant-growth dividend discount model? Report your answer in decimal form and round to at least 4 decimals.

Paul Corporation is a publicly traded stock that has consistently paid an annual dividend to its investors.  In fact, Paul Corporation has historically grown its dividends by exactly 2% every year.  The company just paid an annual dividend of $4.50, and you are looking to buy the stock and hold it for the foreseeable future.  The stock has a Beta of 1.76, and the annual market return is 12%.  The current risk-free rate is 5%.   Based on the information above, how would you best characterize the risk level of Paul Corporation stock?

Consider a world with risky assets and a risk-free rate.  The optimally risky portfolio has a Sharpe Ratio of 1.2, an expected return of 14%, and a standard deviation of 8%.  An investor would like to have a portfolio that returns exactly 13.2% and has a standard deviation of 7% or less.  Does such a portfolio exist in this world?

You hold the following two stocks:  40% invested in Stock A and 60% invested in Stock B.   Company Beta Stock A 1.2 Stock B 0.8 What is the portfolio Beta? Round to two decimal places.

The Fish House increases its dividend each year.  The next annual dividend is expected to be $2.21 a share.  Future dividends will increase by 3.5% annually.  What is the current value of this stock if the discount rate is 12%? Round to the nearest cent.

What are the key assumptions of the Gordon Growth Model? Select all that apply.

The stock of ABC, Inc. has a beta of 0.94.  The market risk premium is 7.1%, and the expected market return is 10.3%.  What is the expected return on ABC, Inc.’s stock? Express as a percentage and round to two decimal places.  Report your answer in decimal form and round to at least 4 decimals.

Consider the following 3-State Economy.  What is the expected return for the stock in this example?   Report your answer in decimal form and round to at least 4 decimals. State of Economy Probability Expected Return Boom 0.05 16% Normal 0.45 7% Recession ? -12%

Consider a world with two possible future states and only two assets: stocks and bonds.  The world is described in the table below. State Probability Return (stocks) Return (bonds) Booming Economy 30% 22% -2% Recession 70% -6% 6% What is the expected return on stocks? Report your answer in decimal form and round to at least 4 decimals.

A company has a beta of 1.0, pays a constant dividend of $3.50 per year, and is expected to continue doing so indefinitely.  The current market return is 9%.  What is the intrinsic value of the company stock?  Round to the nearest cent.