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Unformatted text preview: the expected sales price increases C) dividends are cut D) the expected sales price falls 18) The analysts predict that the price of corporationʹs XYZ stock one year from now will be $22. XYZ announced that is not going to pay dividends next year. You decide that you would be satisfied to earn a 10 percent on the investment on this stock, thus, this stock is worth ________ for you now. A) $22 B) $24 C) $20 D) $18 19) Using the Gordon growth formula, if D1 is $1.00, ke is 10 percent or 0.10, and g is 5 percent or 16) ______ 17) ______ 18) ______ 19) ______ 0.05, then the current stock price is ________. A) $30 B) $40 C) $20 D) $10 20) A monetary expansion ________ stock prices due to a decrease in the ________ and an increase in 20) ______ the ________, everything else held constant. A) increases; required rate of return; future sales price B) increases; required rate of return; dividend growth rate C) reduces; future sales price; expected rate of return D) reduces; current dividend; expected rate of return 21) If additional information is not used when forming an optimal forecast because it is not available 21) ______ at that time, then expectations are ________. A) still considered to be formed rationally B) formed adaptively C) formed equivalently D) obviously formed irrationally 22) If in an efficient market all prices are correct an...
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This document was uploaded on 03/20/2014 for the course ECO ECO349 at University of Toronto.
- Winter '14