1. The recent Great Recession of 2008-2009 has had significant impact on a wide range of corporate performance. What impact would you predict it had on leverage? Would financial leverage have increased, decreased, or remained the same? What about operating leverage? Why??
2. A company has announced that it will pay a dividend of $2.86 per share next year, and thereafter you expect the dividend to grow at a constant rate of 4.6% per year indefinitely into the future. If the required rate of return is 12.6% per year, what would be a fair price for the stock today? (Answer to the nearest penny.)