1 A,B,C

ANSWER

Jaynestown Corp is currently priced at $20.00 per share. They just paid their annual dividend of $1.03. They have been experiencing growth in dividends of 5% and expect this to continue. What is the firm's cost of equity? (Answer as a percentage and round to 2 decimals.) Select one: a. 8.31% b. 11.81% c. 10.41% d. 8.51% e. 12.57% It is often said that you can reduce your investment risk by creating a portfolio of stocks rather than investing in a single stock. This concept is referred to as diversification. Diversification significantly reduces some component of the total risk (also referred to as diversifiable risk). What is the name of the basic risk concept that we can not reduce through diversification? Select one: Interest rate risk Systematic (market) risk Labor risk Non-systematic (unique) risk Foreign exchange risk The expected market rate of return is 12%, and the risk free rate is 5%. Stock A has a beta of 2.6. If the stock is currently priced to yield a return of 20% (expected return), then: Select one: a. The stock is fairly priced b. The stock lies above the SML c. The stock is overpriced d. The stock lies on the SML e. The stock is underpriced