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1) Multiple choice questions A share is expected to pay dividends of $1 in one year, $1

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1) Multiple choice questions A share is expected to pay dividends of $1 in one year, $1.20 in two years and then $1.30 in three years with this amount lasting in perpetuity. The current intrinsic value of this share given a discount rate of 5% is: Select one: $26.43 $25.62 $38.43 $25.10

2)The following are estimates of the single index model for two stocks: 1 Stock Expected Return Beta Nonsystematic SD 12.8% 2.5 9% 2 6.6% 0.5 3% The market index has an expected return of 8% and a standard deviation (SD) of 9% and the risk-free rate is 5%. Calculate the weights in stocks 1 and 2 in the optimal risky portfolio consisting of Stocks 1 and 2 and market index.