1. If expected return is less than required return on an asset, rational investors will (4 points) (a) buy the asset, which will drive the price up and cause expected return to reach the level of the required return. (b) sell the asset, which will drive the price down and cause the expected return to reach the level of the required return. (c) sell the asset, which will drive the price up and cause the expected return to reach the level of the required return. (d) buy the asset, since price is expected to increase. 2. Shareholders exert control of the management of the firm by (4 points) a. electing board members who can replace management. b. directly replacing management with themselves. c. buying shares in an IPO at a discounted price. d. running the daily operations of the firm. e. None of the above. 3. Alpha's preferred stock currently has a market price equal to $80 per share. If the dividend paid on this stock is $6 per share, what is the required rate of return investors are demanding from Alpha's preferred stock? (4 points) a. 7.5% b. 13.3% c. 6.0% d. $6.00 e. None of the above is a correct