1. Templex common stock currently sells for $30 and its current dividend is $1.50. If the required rate of return on Helix stock is 15%, what is the implied growth rate of its earnings and dividends?

13.5%

9.5%

10.0%

30.0%

2. A college student owns two securities: TIMBA and SIMBA. TIMBA has an expected return of 15 percent with a standard deviation of those returns being 11 percent. SIMBA has an expected return of 12 percent, and a standard deviation of 7 percent. The correlation of returns between TIMBA and SIMBA is 0.81. If the portfolio consists of $6,000 in SIMBA and $4,000 in TIMBA, what is the expected standard deviation of portfolio returns?

8.18%

13.20%

8.60%

9.71%

3. What is the current value of Stylish Socks, Inc. to an investor who has a required rate of return of 12 percent? The current dividend is $1.00 and the dividends are expected to grow 8 percent per year for 3 years. At the end of 3 years the investor expects to sell the security for $76.

$79.51

$56.90

$51.13

$76.00