1. For a firm with a constant payout ratio, the dividend growth rate can be estimated as:

A) Payout x Return of equity

B) Return on retained earnings x Retention ratio

C) Payout ratio x Return on assets

D) Return on equity x (1 + Retention ratio)

E) Return of assets x Retention ratio

2. The risk-free rate of return is 3 percent and the market risk premium is 9 percent. What is the expected rate of return on a stock with a beta of 1.28?

11.52

14.52

9.84

6.84

15.36