5. A broker offers to sell you shares of Bay Area Healthcare,which just paid a dividend of $2 per share. The stock's price is$30 a share. The dividend is expected to grow at a constant rate of5% per year. The stock's required rate of return is 12%. What isthe expected total return yield (this is the expected dividendyield + expected capital gains yield) for each of the next threeyears?
Choice: 8%
Choice: 10% C
hoice: 12%
Choice: 14%
6. Assume the risk-free rate is 6% and the market risk premiumis 7%. The stock of Physicians Care Network (PCN) has a beta of1.5. The last dividend paid by PCN (D0) was $2 per share. Whatwould PCN's stock value be if the dividend were expected to grow ata constant rate of negative 5%.
Choice: $6.00
Choice: $8.84
Choice: $9.50
Choice: $17.60
7. Assume the risk-free rate is 5% and the market risk premiumis 8%. The stock of Physicians Care Network (PCN) has a beta of1.5. The last dividend paid by PCN (D0) was $2 per share. Whatwould PCN's stock value be if the dividend were expected to grow ata constant rate of 0%.
Choice: $0.00
Choice: $5.05
Choice: $11.77
Choice: $20.40
8. Assume the risk-free rate is 6% and the market risk premiumis 6%. The stock of Physicians Care Network (PCN) has a beta of1.5. The last dividend paid by PCN (D0) was $2 per share. Whatwould PCN's stock value be if the dividend were expected to grow ata constant rate of 10%.
Choice: $35.00
Choice: $40.00
Choice: $44.00
Choice: $50.00
