1. The common stock of Eddie's Engines, Inc. sells for $29.01 a share. The stock is expected to pay $3.90 per share next year. Eddie's has established a pattern of increasing their dividends by 6.0 percent annually and expects to continue doing so. What is the market rate of return on this stock? 7.44 percent 24.58 percent 13.44 percent 19.44 percent 7.06 percent
2. Mariott Corporation originally a 9.375% bond in 1987. These $1,000 par value bonds mature in three years. What is the value of a Marriott Corporation bond at each of the following required rates of return, assuming the investor will hold the bond to maturity? Assume the coupon is paid annually.
A. 7%
B. 9.375%
C. 12%