1. Is it possible that a positive alpha will be associated with inferior performance? Explain.
2. Why is it important to continuously manage and control your portfolio? Explain.
3. One year from now, Indiana Publishing is expected to pay a $4.25 dividend on its common stock. After that time, the dividend is expected to grow by 6% per year forever. If the firm’s equity cost of capital is 13%, the price of a share of a share of its stock is should be closest to ________.