05 EOC5355 - a - EOC535-5 Question MC #6 Cartwright...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
EOC535-5 Question MC #6 Cartwright Brothers' stock is currently selling for $40 a share. The stock is expected to pay a $2 dividend at the end of the year. The stock's dividend is expected to grow at a constant rate of 7 percent a year forever. The risk-free rate (rRF) is 6 percent and the market risk premium (rM - rRF) is also 6 percent. What is the stock's beta? a. 1.06 b. 1.00 c. 2.00 d. 0.83 e. 1.08 Question MC #4 The last dividend paid by a company was $2.20. Klein's growth rate is expected to be 10 percent for one year, after which dividends are expected to grow at a rate of 6 percent forever. The company's stockholders require a rate of return on equity (rs) of 11 percent. What is the current price of the stock? a. $44.00 b. $46.64 c. $48.40 d. $48.64 e. $50.40 Question MC #3 If the stock market is semistrong efficient, which of the following statements is most correct? a. All stocks should have the same expected returns; however, they may have different realized returns. b. In equilibrium, stocks and bonds should have the same expected returns. c. Investors can outperform the market if they have access to information which has not yet been publicly revealed. d. If the stock market has been performing strongly over the past several months, stock
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

05 EOC5355 - a - EOC535-5 Question MC #6 Cartwright...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online