Finance 301: SIMonday April 7, 20081. A company recently paid a dividend of $4.35 and because of some hard times, is expecting to have a constant growth rate of -5.5% per year. What is the value of the stock if the expected rate of return is 12%?2. Which of the following is discounted using the corporate value model?a. Dividendsb. Free Cash flowsc. Paymentsd. Liabilities3. What is the formula for finding the value of one share of stock using the corporate value model?4. Is the dividend growth model or the corporate value model usually preferred, and why?a. Dividend growth is usually preferred because it is so much easier to forecast dividendsb. Corporate value model is usually preferred because it is so much easier to forecast dividendsc. Dividend growth is usually preferred because it is more accurated. Corporate value model is usually preferred because many firms don’t pay dividends, and sometimes dividends are hardto forecast.5. When using the firm multiples method, which of the following would be the most likely comparison under P/E?a. Microsoft and Proctor & Gambleb. Ford and Chevyc. Caterpillar and Guccid. Gerber and Coach6. Which two conditions hold when the market is in equilibrium?a. Dividends grow at a constant rate, and rs>gb. Dividends grow at a constant rate, and expected returns are also constantly growing.c. The current market price equals its intrinsic value, and expected returns equal required returns.d. None of the above are true when the market is in equilibrium.7. Concerning establishing market equilibrium: If the price is below intrinsic value, what will happen?a. Buy orders will be greater than sell orders, which will bid up P0 until the expected return equals the required return.b. Sell orders will be greater than buy orders, which will bid up P0 until the expected return equals the required return.c. Buy orders will be greater than sell orders, which will bid down P0 until the expected return equals the required return.d. None of the above—this doesn’t even make sense.8. ______________________ is a hybrid security that companies are required to pay prior to paying common stockholders. Companies can omit paying this without fear of going bankrupt, but the payments accumulate over time.a. Common Stockb. Special Stockc. Reserved Stockd. Preferred Stock9. A company has perpetual preferred stock outstanding that sells for$55 a share and pays a dividend of $4.50 at the end of each year. What is the required rate of