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(5 marks) Which of the following statements are correct? a. Stock A has an expected return of 10% and a standard deviation of 15%, and

(5 marks) Which of the following statements are correct? a. Stock A has an expected return of 10% and a standard deviation of 15%, and stock B has an expected return of 13% and a standard deviation of 14%. No investor would ever buy stock A because it has a lower expected return and a higher risk than stock B. b. A firm is expected to pay a dividend of 3 per share in one year. This dividend is expected to grow at a rate of 7% forever. If the current market price for a share is 67, the companys cost of equity is higher than 11%. c. A 10-year bond has an annual coupon rate of 6% and face value of 100. The bond pays semi-annual coupons. If the yield to maturity on the bond is 10% per year, the price of the bond must be below par. d. A higher yield to maturity implies that a bonds expected return is higher.

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