Practice Questions: 1A. Coolers Light SA/NV (NYSE: BUD) just paid a dividend of $3.50 per share. The...

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Finance

Practice Questions:
1A. Coolers Light SA/NV (NYSE: BUD) just paid a dividend of$3.50 per share. The company is expected to increase its nextdividend by 8% and pay it out in one year. After that, dividendgrowth is expected to be 3% forever. What should Coolers Lightstock be priced at if the required return on its stock is estimatedat 9%?
A) $58.33 B) $63.00 C) $66.50 D) $71.82
2B. The volatility of Lowes share prices is 35%, and that ofDodge Ram share is also 35%. When I hold both stocks in myportfolio with an equal weight (50% in each stock), and the stockreturns have a correlation of minus one, the overall volatility ofreturns of the portfolio is:
A) 70%â€¨
B) 35%
C) more than 35%, but below 70%
D) zero

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FORMULA FOR CALCULATING STOCK PRICE VALUE OF STOCK D11KDn1KG11Kn D1 D01G 351008 378 D2 D11G 3781003 389 n noof years 1 year K RETURN ON EQUITY See Answer

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