1. A firm currently earns $1.00 per share. A financial analyst believes that earnings will grow annually at the rate of 10 percent for five years and then decline to 5 percent. What are the expected earnings after ten years?
2. The stock of Furniture Unlimited went from $92 to $100 last year. The firm also paid $1.50 in dividends. Compute the rate of return.
3. Over a period of time, small-company stocks produced an average annual return of 17.1 percent with a standard deviation of 32.6 percent. Based on this information, what is the range of returns an investor can expect to earn in any one year given a 95 percent probability range?