Class room Preparation for Equity Securities FIRE 312 Spring 2009 Dan Salandro A prerequisite for this course is FIRE 311. In all sections of this offering here at VCU a large portion of the course is devoted to calculating the prices of common stocks using the dividend discount model. The following set of problems serve as a review for you and should be completed before the class as designated in the Bb notice. If you have problems you should consult your text for a very thorough review of common stock pricing. You will be selected at random during class to provide the solutions to the problems as a way for you to actively learn and participate and to speed our coverage of this review topic. Do your work with a calculator and on a piece of paper that you will bring to class. 1. Assume that investors require a 9 percent rate of return on a stock and that the current dividend is $1.14. If investors expect dividends to grow at a constant compound rate find the price of the stock if that rate is
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