Probability that this stock will produce return

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1. A stock had annual returns of 3.6 percent, -8.7 percent, 5.6 percent, and 12.5 percent over the past four years. Which one of the following best describes the probability that this stock will produce a return of 22 percent or more in a single year?

less than 0.1 percent

less than 0.5 percent but greater than 0.1 percent

less than 1.0 percent but greater the 0.5 percent

less than 2.5 percent but greater than 0.5 percent

less than 5 percent but greater than 2.5 percent

2. Combined Communications is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 24 percent a year for the next 4 years and then decreasing the growth rate to 5 percent per year. The company just paid its annual dividend in the amount of $1.30 per share. What is the current value of one share of this stock if the required rate of return is 9.25 percent?

$50.03

$59.70

$53.57

$45.75

$60.51

Reference no: EM131893796

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