1. Explain what is reverse causality? Find or develop a case (or an example) of possible reverse causality. Explain what it is subject to reverse causality?
2. The common shares of Jones & Smith, Inc. sell for $22 per share. The firm is expected to set its next annual dividend at $0.68 per share, and all future dividends are expected to grow by 5 percent per year indefinitely. If Jones & Smith, Inc., experiences a flotation cost of 15 percent on new equity issues, what will be the flotation-adjusted cost of equity? a. 8.64 percent. b. 6.63 percent c. 5.87 percent d. 7.92 percent.