Which of the following is a true statement regarding publicly traded stocks and bonds? O A share of common stock is generally easier to value in practice than a bond. O Market interest rates and bond prices move in the same direction. O The constant dividend growth model can be used to value stocks only if the dividend growth rate remains constant. O The price of a stock is greater than the present value of all future dividends.

Selling shares of stock for more than you originally paid is called modern portfolio theory. leverage. current income. capital gain.

Which of the following statements is CORRECT?   a.  The constant growth model takes into consideration the capital gains investors expect to earn on a stock.   b.  Two firms with the same expected dividend and growth rate must also have the same stock price.   c.  It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant.   d.  If a stock has a required rate of return rs = 12%, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%.   e.  The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. provide an explanation for the choice.

Do solve all parts  A. What risk premium do you use? Why? B. Why is the geometric mean lower than the arithmetic mean for both bonds and bills? C. If you had to use a risk premium with the longer periods, what biases will the investor have?