Practice Questions:
1A. Coolers Light SA/NV (NYSE: BUD) just paid a dividend of$3.50 per share. The company is expected to increase its nextdividend by 8% and pay it out in one year. After that, dividendgrowth is expected to be 3% forever. What should Coolers Lightstock be priced at if the required return on its stock is estimatedat 9%?
A) $58.33 B) $63.00 C) $66.50 D) $71.82
2B. The volatility of Lowes share prices is 35%, and that ofDodge Ram share is also 35%. When I hold both stocks in myportfolio with an equal weight (50% in each stock), and the stockreturns have a correlation of minus one, the overall volatility ofreturns of the portfolio is:
A) 70%

B) 35%
C) more than 35%, but below 70%
D) zero
