Question 17 0 5 pts stock x has a beta of 06 while

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Question 17 0 / 5 pts Stock X has a beta of 0.6, while Stock Y has a beta of 1.4. Which of the following statements is correct? A portfolio consisting of $50,000 invested in Stock X and $50,000 invested in Stock Y will have a required return that exceeds that of the overall market Stock Y must have a higher expected return and a higher standard deviation than Stock X If expected inflation increases but the market risk premium is unchanged, then the required return on both stocks will fall by the same amount
Correct Answer
If the market risk premium declines but expected inflation is unchanged, the required return on both stocks will decrease, but the decrease will be greater for Stock Y You Answered If expected inflation declines but the market risk premium is unchanged, then the required return on both stocks will decrease but the decrease will be greater for Stock Y Question 18 5 / 5 pts Dan is a chemist for ABC, a major drug manufacturer. Dan cannot earn excess profits on ABC stock based on the knowledge he has related to his experiments if the financial markets are
Question 19 5 / 5 pts The expected return on Natter Corporation’s stock is 14%. The stock’s dividend is expected to grow at a constant rate of 8%, and it currently sells for $50 a share. Which of the following statements is correct?
The stock’s dividend yield is 8% The current dividend per share is $4.00 Correct! The stock price is expected to be $54 a share one year from now The stock price is expected to be $57 a share one year from now Question 20 5 / 5 pts Which of the following statements is correct, assuming stocks are in equilibrium? Correct!
Assume that the required return on a given stock is 13%. If the stock’s dividend is growing at a constant rate of 5%, its expected dividend yield is 5% as well
A required condition for one to use the constant growth model is that the stock’s expected growth rate exceeds its required rate of return Other things held constant, the higher a company’s beta coefficient, the lower its required rate of return
Quiz Score: 75 out of 100

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