1. Which of the following will cause a reduction in the current price of a stock?
A. An increase in the current dividend B. An increase in the risk premium C. An increase in the growth rate of the dividend D. Both a decrease in the current dividend and an increase in the risk-free return
2. Suppose NYS decides to DECREASE its marginal income tax rate for households with incomes above $250,000. In the bond market, the likely result is
A. no one would be willing to hold municipal bonds.
B. the yield on NYS municipal bonds will fall.
C. the spread between NYS municipal and corporate bond yields would decrease .
D. both b and c.