Ceteris paribus, an increase in the government budget deficit will cause the risk premia on corporate bonds to

Select one:

a.increase.

b.decrease.

c.stay the same.

d.cannot be determined.

An analyst says that inside information would not have helped investors forecast the collapse of the stock market in 2008. This is true if markets satisfy

Select one:

a.allocational efficiency.

b.weak efficiency.

c.semi-strong efficiency.

d.strong efficiency.

If the annual earnings for a company are $10, the expected future price of its stock is $110, and the current price is $100, then the required rate of return on the stock is

Select one:

a.10%.

b.20%.

c.30%.

d.none of the above.

The earnings for a company are $10 and they are expected to grow at 2% annually. According to the Gordon Growth Model, if the required rate of return is 5%, then the price of the company's stock should be

Select one:

a.$210.

b.$510.

c.$525.50.

d.none of the above.