1. Grant Corporation's stock is selling for $40 in the market. The company's beta is 0.8, the market risk premium is 6 percent, and the risk-free rate is 9 percent. The dividend just paid was $2, and dividends are expected to grow at a constant rate. What is the growth rate for this stock?
a. 5.52%
b. 5.00%
c. 13.80%
d. 8.80%
e. 8.38%
2. What is the current yield on the 10 yr Treasury bond?
Why is this important, and explain the current market forces that drive this interest rate.