1. A share of preferred stock currently sells for $34 a share. If the dividend is $2 per share, what is the required rate of return?
5.88%
5.29%
4.41%
6.53%
2. If the nominal rate of return is 10 percent and the real rate is 9 percent, then, according to the Fisher Effect, what is the rate of inflation?
0.92%
0.76%
1.03%
11.01%
3. Machiavelli's Pizzeria Incorporated (Ticker: MPI) plans to pay a dividend of $3.00 per share in 5 years. Dividends will then grow at an annual rate of 1.9 percent for 18 more years after the initial dividend is paid. Thus the abnormal growth period will end 23 years from now. After 23 years, dividends will grow at a constant annual rate of 2.3 percent indefinitely. If the required rate of return is 12 percent, what is MPI's current price per share (P0)?
$12.10
$7.69
$19.02
$4.36
4. NPV and IRR may disagree about which mutually exclusive project to take if crossover rate is greater than zero and the required rate of return is:
below the crossover rate
greater than the rate of inflation
above the crossover rate
past the point of no return