1. A decrease in which of the following will increase the estimated value of a stock according to the dividend discount constant growth model?
a) Dividend amount
b) Dividend growth rate
c) Both the required rate of return and the dividend growth rate
d) Required rate of return
2 . What is the primary source of a company's stock price appreciation?
a) Company investment of retained earnings
b) Company investment of dividends
c) Shareholder investment of dividends
d) Shareholder investment of retained earnings
3. A firm is planning on increasing its annual dividend by 3.50% a year in perpetuity. The company just paid its annual dividend in the amount of $.20 per share. What is the current value of one share of this stock if the required rate of return is 15.50%?
a) $2.04
b) $1.67
c) $1.73
d) $1.34