8.1 Dividend Discount Model According to the 2001 Value Line Investment Survey, the dividend growth for Phillips Petroleum (P) is 2.5 percent. Find the current price quote and dividend information at finance.yahoo.com. If the growth rate given in the Value Line Investment Survey is correct, what is the required return for Phillips Petroleum? Does this number make sense to you?

8.2 Dividend Discount Model Go to www.dividenddiscountmodel.com and enter ONE (for Bank One) as the ticker symbol. You can enter a required return in the Discount Rate box and the site will calculate the stock price using the dividend discount model. If you want an 11 percent return, what price should you be willing to pay for the stock? At what required return does the current stock price make sense? You will need to enter different required returns until you arrive at the current stock price. Does this required return make sense? Using this market required return for Bank One, how does the price change if the required return increases by 1 percent? What does this tell you about the sensitivity of the dividend discount model to the inputs of the equation?

8.3 Stock Quotes What is the most expensive publicly traded stock in the United States? Go to finance.yahoo.com and enter BRKA (for Berkshire Hathaway Class A) and select "Detailed" on the pull down menu. What is the current price per share? What is the 52-week high and low? How many shares trade on an average day? How many shares have traded today?

8.4 Supernormal Growth You are interested in buying stock in Coca-Cola (KO). You believe that the dividends will grow at 15 percent for the next four years and level off at 6 percent thereafter. Using the most recent dividend on finance.
yahoo.com, if you want a 12 percent return, how much should you be willing to pay for a share of stock?

8.5 Market Operations How does a stock trade take place? Go to www.nyse.com, click on "The Trading Floor" and "Anatomy of a Trade." Describe the process of a trade on the NYSE.