What is the required rate of return on stock

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Reference no: EM131913404

1. William has a choice of investing $2,500 for 5 years in CD #1 that pays 6% compounded annually or a CD #2 that pays 6.5% simple interest annually (meaning it does not pay interest on the interest). What will be the value of each investment at the end of five years?

a) #1, $3,250.00; #2, $3,312.50

b) #1, $3,250.00; #2, $3,425.22

c) #1, $3,345.56; #2, $3,312.50

d) #1, $3,345.56; #2, $3,425.22

2. The current price of XYZ stock is $50.00. Dividends are expected to grow at 7% indefinitely and the most recent dividend was $1. What is the required rate of return on XYZ stock?

9.0%

11.2%

9.1%

9.3%

10.6%

Reference no: EM131913404

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