28.An increase in a corporation's cash dividend is most likely to (a)decrease the price of its stock (b)increase the price of its stock (c)have no impact on the price of its stock (d)decrease trading activity of its stock Answer:(b) 29.Raising cash by issuing new stock is to the corporation than raising cash by foregoing the payments of dividends. (a)is less costly (b)is more costly (c)is no different (d)just as costly Answer:(b) 30.Gough Fraser is considering purchasing the stock of ASIOA Companies,which he plans to hold indefinitely.ASIOA just paid an annual dividend of $2.50 and the price of the stock is $48 per share.The earnings and dividends of the company are expected to grow forever at a rate of 6 percent per year.What annual rate of return does Gough expect on his investment? (a)10.58% (b)11.21% (c)11.52% (d)12.46% Answer:(c) 31.Beazley Inc.just paid a dividend of $3.00 per share.This dividend is expected to grow at a supernormal rate of 15 percent per year for the next two years.It is then expected to grow at a rate of 6 percent per year forever.The appropriate discount rate for Beazley's stock is 17 percent.What is the price of the stock? (a)$17.64 (b)$27.27 (c)$33.78 (d)$46.15 Answer:(c) 9-89-8 28. An increase in a corporation’s cash dividend is most likely to ________. (a) decrease the price of its stock (b) increase the price of its stock (c) have no impact on the price of its stock (d) decrease trading activity of its stock Answer: (b) 29. Raising cash by issuing new stock is ________ to the corporation than raising cash by foregoing the payments of dividends. (a) is less costly (b) is more costly (c) is no different (d) just as costly Answer: (b) 30. Gough Fraser is considering purchasing the stock of ASIOA Companies, which he plans to hold indefinitely. ASIOA just paid an annual dividend of $2.50 and the price of the stock is $48 per share. The earnings and dividends of the company are expected to grow forever at a rate of 6 percent per year. What annual rate of return does Gough expect on his investment? (a) 10.58% (b) 11.21% (c) 11.52% (d) 12.46% Answer: (c) 31. Beazley Inc. just paid a dividend of $3.00 per share. This dividend is expected to grow at a supernormal rate of 15 percent per year for the next two years. It is then expected to grow at a rate of 6 percent per year forever. The appropriate discount rate for Beazley’s stock is 17 percent. What is the price of the stock? (a) $17.64 (b) $27.27 (c) $33.78 (d) $46.15 Answer: (c)