1. Changes in Growth and Stock Valuation Consider a firm that had been priced using a 10 percent growth rate and a 13 percent required rate. The firm recently paid a $2.20 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 11 percent rate. How much should the stock price change (in dollars and percentage)?
$19.43, 16%
$41.43, 51%
$41.43, 34%
$19.43, 628%
2. Buying Stock with a Market Order You would like to buy shares of Ralph Lauren (RL). The current bid and ask quotes are $85.19 and $85.32, respectively. You place a market buy-order for 400 shares that executes at these quoted prices. How much money did it cost to buy these shares?
$34,076
$34,128
$68,204
$52