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(2) Which of the following statements is most correct? (A) The expected return of a stock will be higher than the market return if the
(2) Which of the following statements is most correct? (A) The expected return of a stock will be higher than the market return if the beta of the stock is higher than 1 . (B) The higher the standard deviation of a stock's returns, the higher will be the stock's beta. (C) If two stocks have the same standard deviation of returns, then the two stocks will have the same beta. (D) If two stocks have the same beta, then they must have the same standard deviation of returns. (E) If two stocks' returns have no correlation with the return of the market, then the two stocks will have the same beta. (3) Under CAPM, which of the following is correct? (A) A stock's expected return is linearly related to the stock's beta. (B) A stock's expected return is not linearly related to the stock's beta. (C) A stock's required return is linearly related to the stock's beta. (D) A stock's required return is not linearly related to the stock's beta. (E) None of the above statements is correct. (4) Stock A and Stock B has the same market price. Stock A has an expected return of 10% and Stock B has an expected return of 15%. Both stocks expect to pay the same dollar dividend one year from now. Assuming Constant Growth Model holds, which of the following statements is correct? (A) Stock A's required return is lower than that of Stock B. (B) The two stocks have the same dividend perpetual growth rate. (C) Stock A's dividend has a higher constant annual perpetual growth rate than that of Stock B. (D) Stock B's dividend has a higher constant annual perpetual growth rate than that of Stock A. (E) None of the above statements is correct
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