Stock values computed by valuation models may differ

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21) Stock values computed by valuation models may differ from actual market prices because A) it is difficult to estimate future dividend growth rates. B) it is difficult to estimate the risk of a stock. C) it is difficult to forecast a stock’s future dividends. D) all of the above are true. Answer: D 134
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22) According to the efficient market hypothesis, the current price of a financial security 23) The efficient market hypothesis 24) If the optimal forecast of the return on a security exceeds the equilibrium return, then 25) According to the efficient market hypothesis A) one cannot expect to earn an abnormally high return by purchasing a security. B) information in newspapers and in the published reports of financial analysts is already reflected in market prices. C) unexploited profit opportunities abound, thereby explaining why so many people get rich by trading securities. D) all of the above are true. E) only (A) and (B) of the above are true. Answer: E 26) Another way to state the efficient market condition is that in an efficient market, 135 27) Another way to state the efficient market hypothesis is that in an efficient market,
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