eco349 fall 2013 mid mc

A 22 b 24 c 20 d 18 19

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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 corporation╩╣s 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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