1. Combined Communications is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 24 percent a year for the next 4 years and then decreasing the growth rate to 6 percent per year. The company just paid its annual dividend in the amount of $1.20 per share. What is the current value of one share of this stock if the required rate of return is 9.00 percent?

$77.71

$59.85

$67.03

$72.66

$63.78

2. Which one of the following is a correct ranking of securities based on their volatility over the period of 1926 to 2014? Rank from highest to lowest.

long-term government bonds, long-term corporate bonds, small-company stocks

small-company stocks, long-term corporate bonds, large-company stocks

long-term corporate bonds, large-company stocks, U.S. Treasury bills

large-company stocks, U.S. Treasury bills, long-term government bonds

small-company stocks, large-company stocks, long-term corporate bonds