1. For a firm with a constant payout ratio, the dividend growth rate can be estimated as:
A) Payout x Return of equity
B) Return on retained earnings x Retention ratio
C) Payout ratio x Return on assets
D) Return on equity x (1 + Retention ratio)
E) Return of assets x Retention ratio
2. The risk-free rate of return is 3 percent and the market risk premium is 9 percent. What is the expected rate of return on a stock with a beta of 1.28?
11.52
14.52
9.84
6.84
15.36