11.)

(A) If the expected rate of return on a stock is lower than the required rate,

1. The stock is experiencing supernormal growth.
2. The stock should be sold.
3. The company is probably not trying to maximize price per share.
4. The stock is a good buy.
5. Dividends are not being declared.

(B) Assuming "g" will remain constant, the dividend yield is a good measure of the required return on a common stock under which of the following circumstances?

1. g = 0.
2. g > 0.
3. g < 0.
4. Under no circumstances.
5. Answers a and b are both correct.