1. A company's current dividend per share was $1 per share. The company expects that the dividends will grow at 10% for the next three years. After that the dividends will increase at 7%. The discount rate is 17%, what is the present value of the common stock?
2. Suppose that there are two independent economic factors, F1 and F2. The risk-free rate is 9%, and all stocks have independent firm-specific components with a standard deviation of 49%. Portfolios A and B are both well-diversified with the following properties: